MAS proposes governance updates for banks and insurers

The consultation covers director independence, board composition, among others.

The Monetary Authority of Singapore (MAS) has proposed targeted updates to corporate governance requirements for banks, insurers and designated financial holding companies.

The proposals are intended to strengthen safeguards at financial institutions with greater retail reach or systemic importance whilst reducing unnecessary requirements for lower-impact firms.

MAS proposed refining the criteria used to determine whether a director is independent from management, business relationships and substantial shareholders.

Under the proposal, directors employed by or dealing with related corporations or affiliates would be considered non-independent from management and business relationships.

MAS said clearer criteria would support objective judgment and effective board oversight.

The regulator also proposed increasing the minimum board size and requiring a majority of independent directors at domestic systemically important banks and insurers, as well as full banks.

The changes are intended to ensure boards have sufficient expertise, perspectives, and independent oversight as financial institutions grow in scale and complexity.

MAS is also seeking to expand the number of key appointments requiring prior regulatory approval.

These would include the chairperson of the nominating committee at locally incorporated banks and insurers and the chief information officer of domestic systemically important banks.

MAS said the proposed requirements reflect the growing importance of succession planning and technology and information risk management.

At the same time, the regulator proposed removing prior approval requirements for certain board and senior management appointments at financial institutions with less retail reach or lower systemic importance.

Designated financial holding companies with bank or insurer subsidiaries would generally be subject to the same governance standards as their subsidiaries.

MAS said the approach would keep corporate governance requirements proportionate to the size, risk profile and potential impact of each institution.