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New regulations compel directors to state reasons for quitting

Directors who quit the boards of companies listed on the Singapore Exchange (SGX) will have to explain their reasons under new regulations outlined Thursday.

The new rules, which take effect October 1, are meant to improve transparency for investors. The change follows a survey into corporate governance focusing on the 488 resignations of directors during a one-year period. Conducted by the National University of Singapore, the survey found that no reason was given in two-thirds of the cases. Personal reasons were cited in a few. Under the change, investors can be alerted if a board member has resigned over trouble on the corporate floor. It will help them distinguish between routine departures and those motivated by board disagreements or corporate-governance concerns. A resignation “may be an indication that the director has concerns about the company or has a fundamental disagreement with the board or its management,” The Straits Times quoted Associate Professor Mak Yuen Teen, part of the group that conducted the survey, as saying.

With about 200 announcements daily of various corporate matters, a revised format will help draw investors’ attention to the departure of board members. (