“Comply-or-explain” Code of Governance introduced for Singapore’s Town Councils

Singapore
This article is produced by CMS Holborn Asia, a Formal Law Alliance between CMS Singapore and Holborn Law LLC.

Singapore’s Ministry of National Development (MND) has developed a “comply-or-explain” Code of Governance for Town Councils (Code), with the objectives of guiding Town Councils in the execution of their fiduciary responsibilities, promoting greater transparency in operations, and raising governance standards.

Formed in 1989 to give elected Members of Parliament the automy and latitude to run their own Towns in partnership with residents, the Town Councils are public institutions that manage, maintain and improve the common property of the residential and commercial properties in Housing & Development Board estates for the benefit of the residents. As stated by the MND, the Town Councils collectively manage about S$2 billion worth of public and residents’ monies (https://www.mnd.gov.sg/newsroom/press-releases/view/launch-of-code-of-governance-for-town-councils).

The Code was developed in consultation with Town Councils and the public, and an advisory panel comprising academics, governance experts and practitioners was also formed to advise MND on the development and implementation of the Code.

Guiding Principles and Structure of the Code

The Code is based on five guiding principles of integrity, objectivity, accountability, fairness, and transparency, which span four domains:

  • Council Effectiveness,
  • Internal Controls & Processes,
  • Financial Management, and
  • Vendor Management.

The Code sets out principles of good governance and highlights best practices which Town Councils are encouraged to adopt, and should be read in conjunction with the Town Councils Act (Cap. 329A) and its subsidiary legislation, for example, the Town Councils Financial Rules, as well as the Personal Data Protection Act 2012.

Town Councils are required to publicly declare their compliance to the Code using the Governance Disclosure Checklist (2019) starting from FY2020 (1 April 2020 to 31 March 2021). As part of the “comply-or-explain” regime, Town Councils that opt not to comply or that are in the process of working towards compliance with certain Code provisions should provide meaningful explanations on how the governance standards are achieved.

The Town Council’s declaration should be submitted to MND, together with the audited financial statements for the financial year, by 30 September every year. These declarations will be made available for public viewing on the MND website in November/December of that year.

The Code and the Governance Disclosure Checklist (2019) are publicly available, and can also be accessed at the MND’s website.

This publication is not intended to be nor should it be taken as legal advice.