In this piece, I take a look at four of his suggestions to improve corporate governance: sponsor independence, directorship limits, watchlists and the role of lawyers on boards.
On sponsor independence
Concerns around sponsors providing non-sponsorship services, including financial advisory or investor relations functions, are not new. Mak said that this might affect their independence since their main role is to ensure companies comply with the rules.
But existing listing rules address such risks clearly. Sponsors are required to file annual returns, and the rules provide clear guidance on maintaining independence. These include requirements for adequate procedures to manage conflicts of interest and for separate reporting lines between sponsorship and other business activities.
Importantly, where non-sponsorship fees exceed sponsor fees, this must be disclosed in an annual return to the regulator. Specifically, if such fees exceed 100% of sponsorship fees, the sponsor is required to report this in its annual return to the Singapore Exchange Regulation.
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In tandem with the Value Unlock initiatives launched by the Monetary Authority of Singapore and Singapore Exchange, there is also an opportunity for continuing sponsors to broaden the scope of their advisory role beyond regulatory compliance. Given their position, sponsors can play a more proactive role in helping listed companies build their profile and enhance their visibility within the investment community.
This may include supporting investor relations strategy, facilitating engagement with institutional and retail investors and advising on effective market communications. Companies that are well understood and well regarded by investors are better placed to attract capital, support valuation and sustain long-term market confidence.
Sponsors who actively support their clients in this way contribute not only to the success of individual issuers but also to the vibrancy and attractiveness of the Singapore market as a whole.
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Taken together, these safeguards form a regulatory framework that is already robust and responsive to the concerns raised.
On directorship limits
The proposal for a hard cap on directorships is one that understandably attracts attention. Mak suggests a cap of up to five directorships for a retired director.
The question here is a simple one: which number should we set the cap at? The principle on this front is reflected clearly in the Corporate Governance Code, and that is to be non-prescriptive. Not because there should not be any limits, but because Singapore does not have an issue of overboarding.
Available data support this. According to SID’s Singapore Directorship Report 2025, the proportion of directors holding multiple listed company directorships remains low and continues its decreasing trend, with just under 5% holding more than two appointments and less than 1% holding more than four appointments. About nine in 10 listed entity directors hold a single board position.
Where an issue is not widespread, the case for more prescriptive regulation is less clear. Regulation should be proportionate to the problem it seeks to address. From a regulatory perspective, overly rigid rules can also carry unintended consequences. They may constrain market development, reduce the pool of experienced directors willing to serve and limit the flexibility companies need to build boards with the right mix of skills and experience.
Good governance frameworks are anchored in principles and supported by disclosure and accountability. They are not designed to micromanage outcomes.
As the Code undergoes periodic review, it is appropriate that different approaches — whether a hard limit, a comply-or-explain model or the status quo — are carefully considered in view of how it will best serve our market.
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On the watchlist removal
The removal of the watchlist mechanism has also been the subject of discussion. This was, however, a decision that followed extensive deliberation and was informed by market experience.
Mak’s approach seems to be informed by the idea that the watchlist’s main function is to weed out the bad companies from the good. He misses the point.
Companies placed on the watchlist typically faced sustained losses for three consecutive years and a market capitalisation below $40 million. In many cases, because they have been placed on the watchlist, such companies also encountered difficulties accessing funding. The additional pressure of a fixed timeline for potential delisting often compounded these challenges.
In practice, the watchlist might have had its unintended consequence of not fulfilling its objective of pushing recovery towards profitability and improving market capitalisation. For some companies, particularly SMEs, it risked being counterproductive, limiting their ability to stabilise and rebuild, which often requires a longer time horizon.
As articulated by Singapore Exchange Regulation, its removal reflects a pragmatic approach that takes into account how markets function in reality, not just in theory.
On lawyers (and accountants) as independent directors
Mak also suggested that lawyers should not serve as independent directors on firms that receive services from that lawyer’s law firm due to potential conflicts of interest. Such a suggestion should be treated with caution.
If applied consistently, such a position would also extend to other professions, including accountants, whose firms may provide services to listed companies. Yet, boards rely on individuals precisely for their domain expertise.
The critical issue is not whether a profession should be categorically excluded, but whether any conflicts are properly identified, disclosed and managed.
Here, the existing framework provides guidance. Under the Code of Corporate Governance’s Practice Guidance, where a law firm provides services above a $200,000 threshold, the relevant parties, including the issue manager and Catalist sponsors in an IPO or the Nominating Committee, must assess whether independence is affected.
It is also recognised that different partners within the same firm may separately provide services and serve as directors. There is no blanket prohibition, provided appropriate safeguards and disclosures are in place.
In practice, such arrangements are subject to transparency and market discipline. More broadly, it does not appear to be a widespread issue in the Singapore market.
A balance sought
These discussions point to a broader question: the balance between rules and principles.
Prescriptive rules can offer clarity, but they can also be blunt instruments. If applied too rigidly, they risk constraining flexibility, limiting market development and creating unintended consequences.
Singapore’s approach has long been grounded in principles-based regulation, supported by clear expectations on accountability and disclosure. This allows for judgment, context and adaptability — all of which are essential in a dynamic market.
This philosophy extends to areas such as board composition. While some markets have adopted quotas, for example, in relation to gender diversity, Singapore has taken a different path. Board appointments are made based on merit, capability and the experience individual directors bring.
This helps ensure that diversity is substantive rather than symbolic and that confidence in the integrity of board appointments is maintained. The current frameworks on sponsor independence, directorships, the watchlist and conflicts of interest reflect considered judgements shaped by a combination of principle, experience and market realities.
Diverse perspectives, including critical ones, play an important role in this process. Their impact is strongest when grounded in a comprehensive understanding of both the issues and the systems already in place.
At the same time, discussions must reflect the full context in which decisions are made, recognising the complexities involved and the responsibilities borne by different participants in the ecosystem.
Such decisions have to be made carefully, given the impact on stakeholders, including shareholders, employees and even suppliers. Such weighty decisions are made in the boardroom, not the classroom.
The objective that we should all strive for is not simply to have more rules or louder voices, but to ensure that governance continues to strengthen in a way that is balanced, credible and fit for purpose.
June Sim is a governing council member of the Singapore Institute of Directors and a former regulator with over 30 years of experience in Singapore’s capital markets, spanning IPOs, listings compliance and market regulation
