ESG and director’s duties: defining and advancing the interests of the company

ABSTRACT

It is difficult to advance the ESG agenda using company law, especially in common law legal systems. Cases show that directors’ duties require directors to prioritise the ‘interests of the company’, which is equated with ‘shareholders’ interests as a whole’, whether under the traditional common law or, for the UK, under the codified section 172 of the Companies Act 2006. In addition, when determining if directors have acted in the interests of the company, judges typically decline to examine the merits of a business decision, focusing instead on the decision-making process. What this means is that even if directors must take ESG considerations into account, courts have held that the duty to act in the company’s best interests does not impose a positive duty for directors to adopt aggressive ESG focused strategies. We argue that this has always been and should continue to be the correct judicial approach.

KEYWORDS:

• ESG
• directors’ duties
• best interests of the company

Acknowledgements

The authors would like to thank the financial support of EW Barker Centre for Law & Business, National University of Singapore for this article; participants at the Korean Legislature Research Institute ‘ESG as a Pathway to Sustainability’ Conference, 15 June 2023 (Seoul) and ICGS Conference 2023 ‘Sustainable Corporate Governance’, 20–22 October 2023, Prof Paul Davies, Prof Luca Enriques and the two anonymous reviewers for their feedback and comments to an earlier draft of this article. Any error remains ours.

Disclosure statement

No potential conflict of interest was reported by the author(s)..

Notes

1 United Nations, ‘Who Cares Wins: Connecting Financial Markets to a Changing World’ (2004) Financial Sector Initiative. See https://www.unepfi.org/fileadmin/events/2004/stocks/who_cares_wins_global_compact_2004.pdf.

2 The origin and meaning of the term has been explored in great detail in Elizabeth Pollman, ‘The Making and Meaning of ESG’ (2022) ECGI – Law Working Paper No 659/2022, available at SSRN <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4219857> accessed 2 August 2023.

3 For instance, ESG rating standards differ vastly across rating agencies: Aaron K Chatterji and others, ‘Do Ratings of Firms Converge? Implications for Managers, Investors and Strategy Researchers’ (2016) 37 Strategic Management Journal 1597; Robert G Eccles and Judith C Stroehle, ‘Exploring Social Origins in the Construction of ESG Measures’ (July 12, 2018), available at SSRN <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3212685> accessed 2 August 2023.

4 Martin Lipton, Wachtell, Lipton, Rosen & Katz, ‘ESG, Stakeholder Governance, and the Duty of the Corporation’ (Harvard Law School Forum on Corporate Governance, 18 September 2022) <https://corpgov.law.harvard.edu/2022/09/18/esg-stakeholder-governance-and-the-duty-of-the-corporation/> accessed 2 August 2023.

5 Alperen A Gözlügöl, ‘The Clash of “E” and “S” of ESG: Just Transition on the Path to Net Zero and the Implications for Sustainable Corporate Governance and Finance’ (2022) SAFE Working Paper No 325, available at SSRN <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3962238>.

6 Corporate finance and economics scholars generally look at the ESG scores based on the disclosures made by the companies and how the performance of the various branches of ESG are affected by the markets in which the companies operate, the characteristics of the companies, ownership patterns etc. For a comprehensive analysis of the corporate finance literature in this area, see Stuart L Gillan, Andrew Koch and Laura T Starks, ‘Firms and Social Responsibility: A Review of ESG and CSR Research in Corporate Finance’ (2021) 66 Journal of Corporate Finance 101889.

7 See, in particular, the series of debate between Paul Davies and Colin Mayer on corporate purpose: Colin Mayer, Prosperity: Better Business Makes the Greater Good (OUP 2018); Paul Davies, ‘Shareholder Voice and Corporate Purpose: The Purposelessness of Mandatory Corporate Purpose Statements’ in Luca Enriques and Giovanni Strampelli (eds), Board-Shareholder Dialogue: Policy Debate, Legal Constraints and Best Practices (CUP 2023) (forthcoming); Colin Mayer, ‘The Purpose of Corporate Purpose Statement: A Response to “Shareholder Voice and Corporate Purpose: The Purposelessness of Mandatory Corporate Purpose Statements” by Paul Davies’ (2023) ECGI Law Working Paper No 694/2023, available at SSRN <https://ssrn.com/abstract=4397435> accessed 2 August 2023.

8 For example, see Stephen Turner, ‘Corporate Law, Directors’ Duties and ESG Interventions: Analysing Pathways Towards Positive Corporate Impacts Relating to ESG Issues’ (2020) 4 JBL 245; Jonathan A McGowan, ‘The Trouble with Tibble: Environmental, Social, and Governance (ESG) and Fiduciary Duty’ (The University of Chicago Business Law Review Online Edition, 2022) <https://businesslawreview.uchicago.edu/online-archive/trouble-tibble-environmental-social-and-governance-esg-and-fiduciary-duty>.

9 The first legislation, introduced in 2017, imposes an extensive ‘duty of vigilance’ on large French corporations to implement a proactive plan to prevent serious injury to, inter alia, human rights, health and safety of people and to the environment, which might result from the activities of the company, its groups of companies, suppliers and subcontractors throughout the world. A second piece of legislation, introduced in 2019, known as ‘PACTE law’, applies to all French registered companies to take ESG impact into considerations when carrying out their activities, see Alain Pietrancosta, ‘Codification in Company Law of General CSR Requirements: Pioneering Recent French Reforms and EU Perspectives’ (2022) ECGI Law Working Paper No 639/2022, available at SSRN <https://ssrn.com/abstract=4083398>.

10 ibid 15.

11 For non-EU-based companies, the CSDDD will apply if the company’s global net turnover generated from within the EU exceeds certain threshold stipulated.

12 For example, see Pietrancosta (n 9); Mak Chantal, ‘Corporate Sustainability Due Diligence: More Than Ticking the Boxes?’ (2022) 29(3) Maastricht Journal of European and Comparative Law 301; Alessio M Pacces, ‘Civil Liability in the EU Corporate Sustainability Due Diligence Directive Proposal: A Law & Economics Analysis’ in Rik Mellenbergh (ed), Ondernemingsrecht (forthcoming).

13 [2023] 2 All ER 303, [2022] 3 WLR 709 (UKSC) (‘Sequana’).

14 [2023] EWHC 1137 (Ch).

15 [2021] 3 SLR 1269 (SGHC).

16 UK Companies Act 2006, s 414C, s 414CA and s 414CB.

17 Singapore Exchange (SGX) Mainboard Listing Rule 711A. See also SGX, Sustainability Reporting <https://www.sgx.com/sustainable-finance/sustainability-reporting>.

18 UK Companies Act 2006, s 414D(3).

19 Andrew Keay, Directors’ Duties (3rd edn, LexisNexis 2016) 136 [6.3].

20 [1843–60] All ER Rep 249.

21 [1959] AC 324.

22 Aberdeen Railway Co (n 20) 252.

23 Re Smith & Fawcett Ltd (‘Re Smith’) [1942] 1 All ER 542 at 543, [1942] Ch 304, 306.

24 In Singapore, director’s duty to act bona fide in the interests of the company is incorporated under section 157(1) Companies Act 1967, which has been said to ‘mirror a director’s general fiduciary duty at common law’, per Yong Pang How CJ in Cheam Tat Pang v PP [1996] 1 SLR(R) 161 at para 19.

25 Lord Evershed in Greenhalgh v Arderne Cinemas Ltd [1951] 1 Ch 286, 291.

26 Brady v Brady [1988] BCLC 20 CA, 40 (Nourse LJ).

27 Lord Reed P, Lord Hodge DP and Lady Arden.

28 Sequana (n 13).

29 [2023] 2 All ER 303 [65], [225], [243], [265], [332], [372]–[379], [386], [471].

30 It is generally accepted that the idea that ‘shareholders are the corporation’s true owners’ came from Adolf Berle and Garinder Means in their 1932 book The Modern Corporation and Private Property (Transaction Publisher 1932) 380.

31 Sequana (n 13) [65].

32 ibid [332].

33 ibid [374].

34 ibid [380].

35 ibid [376] and [386(g)].

36 ibid [386(c)].

37 Singapore Court of Appeal in Raffles Town Club Pte Ltd v Lim Eng Hock Peter and others and other appeals [2013] 1 SLR 374 [30]. Singapore still applies the traditional common law duties of director under s 157 of the Singapore Companies Act 1967, see DM Divers Technics Pte Ltd v Tee Chin Hock [2004] 4 SLR 424 (SGHC) [80].

38 [2014] 3 SLR 329 [40].

39 Facts in Ho Kang Peng v Scintronix Corp Ltd (formerly known as TTL Holdings Ltd) [2014] 3 SLR 329 (SGCA) (‘Ho Kang Peng’).

40 Charterbridge Corpn. v Lloyds Bank [1970] 2 Ch 46; Intraco Ltd v Multi-Pak Singapore Pte Ltd [1994] 3 SLR(R) 1064.

41 Hutton v West Cork Railway Co (1883) 23 Ch D 654 (‘Hutton’).

42 The consideration of creditor’s interest comes in when the company is in a financially parlour situation or on the verge of insolvency: Parakou Investment Holdings Pte Ltd and another v Parakou Shipping Pte Ltd (in liquidation) and other appeals [2018] 1 SLR 271 (SGCA). See also West Mercia Safetywear Ltd v Dodd [1988] BCLC 250 (CA).

43 Hutton (n 41).

44 The Greene Committee formed in 1925, Report of the Company Law Amendment Committee (Cmnd 2657, 1925–26) and the Jenkins Committee formed in 1959, Report of the Company Law Committee (Cmnd 1749) (presented June 1962) reviewed whether to include the duties in statutory form but both concluded that it was impossible to define directors’ duties statutorily.

45 Department of Trade and Industry, Company Law Review Steering Group, Modern Company Law for a Competitive Economy: Final Report.

46 Andrew Keay, Directors’ Duties (3rd edn, LexisNexis 2016) 128 [6.2].

47 Re West Coast Capital (LIOS) Ltd [2008] CSOH 72.

48 This was relating to the environmental liabilities from the extensive pollution of the Lower Fox River.

49 Sequana [261]–[277].

50 ibid [11], [95], [205], [406], [426], [446].

51 As Lady Arden calls it, see ibid [252].

52 ibid [176]–[177] and [293]–[304].

53 ibid [81]–[90], [176]–[199] and [297]–[311].

54 ibid [371]–[386].

55 ibid [265].

56 ibid.

57 ibid [252].

58 ibid [65]–[66]. As Lord Reed explained, First, the primary duty imposed on directors by s 172(1) is expressed in terms of promoting ‘the success of the company for the benefit of its members as a whole’. Accordingly, the duty is no longer expressed by reference to the interests of the company, and the previous problem of identifying the interests of an artificial person is side-stepped. Since the duty under s 172(1) is focused on promoting the success of the company ‘for the benefit of its members as a whole’, it is clear that, although the duty is owed to the company, the shareholders are the intended beneficiaries of that duty. To that extent, the common law approach of shareholder primacy is carried forward into the 2006 Act. In carrying out their primary duty under s 172(1), the directors are also under a secondary obligation to have regard ‘amongst other matters’ to the considerations listed in paras (a) to (f). This reflects a recognition that the promotion of the company’s success requires that consideration be given to such matters as the interests of its employees and the need to foster its business relationships with suppliers and customers.

59 ibid [386].

60 ibid [66] (Lord Reed P).

61 Ho Kang Peng (n 39) [15].

62 Re Smith (n 23) 306.

63 Sequana [226].

64 Speech by Lord Philip Sales, Directors’ duties and climate change: Keeping pace with environmental challenges (Anglo-Australasian Law Society on 27 August 2019) (‘Lord Sales’ Speech’).

65 We would like to express our sincere thanks to the anonymous reviewer who directed our attention to this point.

66 [1974] AC 821 (PC) 832.

67 Re Smith (n 23).

68 Evans v Brunner, Mond & Co Ltd [1921] 1 Ch 359.

69 ibid 364.

70 UK Companies Act 2006, s 174; Singapore Companies Act 1967, s 157A.

71 See the high standards for departing from a prior decision of a superior court articulated in Young v Bristol Aeroplane Co Ltd [1944] KB 718 (CA).

72 See, for example, the discussion on the introduction of the Fairchild exception and subsequent developments in Patrick Hodge, ‘The Scope of Judicial Law-Making in the Common Law Tradition’ (2020) 84 Rabels Zeitschrift 211.

73 ClientEarth (n 14) [47].

74 ibid.

75 HC Surgical (n 15).

76 Milieudefensie v Royal Dutch Shell plc ECLI:NL:RBDHA:2021:5339.

77 UK Companies Act 2006, s 172.

78 UK Companies Act 2006, s 174.

79 ClientEarth (n 14) [16].

80 ibid [27].

81 The Singapore Medical Council is the Singapore authority regulating the conduct of medical practitioners and has the power to suspend or revoke the license of a medical practitioner. The plaintiff’s allegations were found to be true and Dr Ong was eventually suspended: see Ong Kian Peng Julian v Singapore Medical Council [2022] SGHC 302.

82 HC Surgical (n 15) [40].

83 For ClientEarth, UK Companies Act 2006, s 261 and see also ClientEarth, [4]–[12]. For HC Surgical, Singapore Companies Act 1967, s 216A. See also, Ang Thiam Swee v Low Hian Chor [2013] 2 SLR 340 (CA) [53]–[56].

84 ClientEarth (n 14) [29]–[33].

85 ibid [35]–[45].

86 ibid [18]–[19]. The court uses the language of promoting the success of the company, which mirrors the language used in the UK Companies Act 2006 but there is no substantial difference for present purposes.

87 ClientEarth (n 14) [20].

88 ibid [16]–[25].

89 ibid [47].

90 ibid [48].

91 HC Surgical (n 15) [51]–[59].

92 ibid [60]–[61].

93 Hans Tjio, Lee Pey Woan and Pearlie Koh, Corporate Law (Academy Publishing) [09.043]; Tan Cheng Han, SC (gen ed), Walter Woon on Company Law (3rd rev edn, Sweet & Maxwell) [8.34] and [8.35]. See also Hellard v Carvahlo [2013] EWHC 2876.

94 Charterbridge Corp v Lloyds Bank [1970] Ch 62. This proposition was also applied by Singapore’s Court of Appeal in Intraco (n 40).

95 Hans Tjio, Lee Pey Woan and Pearlie Koh, Corporate Law (Academy Publishing 2015) at paragraph 09.043; Tan Cheng Han, SC (gen ed), Walter Woon on Company Law (3rd rev edn, Sweet & Maxwell 2009) [8.36].

96 Reinier Kraakman and others, The Anatomy of Corporate Law: A Comparative and Functional Approach (3rd edn, Oxford University Press 2017) 69–71. See also, Stephen Bainbridge, ‘The Business Judgement Rule as Abstention Doctrine’ (2004) 57 Vanderbilt Law Review 83.

97 The fears of s 172 (1) introducing ‘a paper trail’ and subjecting the companies to ‘unnecessary bureaucracy’ were raised at the passing of Companies Act 2006. However, Lord Goldsmith, the then Attorney General, dismissed them as not ‘persuasive’; See Hansard HL, Deb, vol 681, cols 840–43, 9 May 2006. We want to thank our anonymous reviewer for bringing our attention to this point.

98 Paul Davies, Sarah Worthington and Christopher Hare, Gower: Principles of Modern Company Law (11th edn, Sweet & Maxwell 2021) [10-030]–[10-032].

99 Explanatory notes to section 172 of the Companies Act 2006 at [328].

100 GC100, Guidance on Directors’ Duties: Section 172 and Stakeholder Considerations (October 2018) 4.

101 Sections 414C, 414CZA and 426B of the Companies Act 2006 require the directors to prepare a strategic report for each financial year which must include a ‘section 172 (1) statement’. The ‘section 172 (1) statement’ needs to describe how the directors have had regard to the matters set out in s 172(1)(a) to (f) when performing their duty under s 172.

102 This reflects the theory in behavioural economics known as ‘recency/availability bias’. The idea being that one is more likely to consider/keep in mind something he/she was recently made aware of: Cass R Sunstein, ‘Behavioral Analysis of Law’ (1997) 64 University of Chicago Law Review 1175, text accompanying fns 61 and 62.

103 Lord Sales Speech (n 64).

104 Paul Davies and others (n 98).

105 698 A.2d 959 (Del. Ch. 1996).

106 Jennifer Arlen, ‘Evolution of Director Oversight Duties and Liability under Caremark: Using Enhanced Information-Acquisition Duties in the Public Interest’ (February 2023) ECGI Working Paper Series in Law, Working Paper No 680/2023 available at SSRN <https://ssrn.com/abstract=4202830> accessed 2 August 2023.

107 John Armour, Jeffrey Gordon and Geeyoung Min, ‘Taking Compliance Seriously’ (2020) 37 Yale Journal on Regulation 1.

108 Leo Strine Jr, Kirby Smith and Reilly Steel, ‘Caremark and ESG, Perfect Together: A Practical Approach to Implementing an Integrated, Efficient and Effective Caremark Strategy’ (July 30, 2020), Iowa Law Review, Vol. 106, pp. 1885–1922 (2021), U of Penn, Inst for Law & Econ Research Paper No. 20–45, available at SSRN <https://ssrn.com/abstract=3664021>.

109 Arlen (n 106) 14–15.

110 Smith v Van Gorkom 488 A.2d 858 (Del. 1985); ibid 15–17.

111 Equitable Life Assurance Society v Hyman [2000] 2 All ER 331 (CA) [17]–[20].

112 R v Cambridge Health Authority, Ex parte B [1995] 2 All ER 129 (CA); R v Ministry of Agriculture, Fisheries and Food, Ex parte First City Trading [1997] 1 CMLR 250 (QB).

113 Text accompanying (n 66).

114 Council of Civil Service Unions v Minister for the Civil Service [1985] AC 374 (HL) (‘GCHQ’) at 410-411.

115 Padfield v Minister of Agriculture, Fisheries and Food [1968] AC 997 (HL); British Oxygen Co Ltd v Minister of Technology [1971] AC 610 (HL). In Singapore, see Registrar of Vehicles v Komoco Motors Pte Ltd [2008] 3 SLR(R) 340 (SGHC).

116 See, for example, In re W & M Roith Ltd [1967] 1 WLR 432.

117 GCHQ (n 114) at 410, describing the principle laid down in Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223 (CA).

118 R v Secretary of State for the Home Department, Ex parte Brind [1991] 1 AC 696 (HL).

119 For example, R v Secretary of State for the Environment, Ex parte Hammersmith and Fulham LBC [1991] 1 AC 521 (HL).

120 See text accompanying (n 94) to (n 96).

121 See for example, Okpabi v Royal Dutch Shell [2021] UKSC 3. For further discussion, see Paul Davies, ‘Corporate Liability for Wrongdoing within (Foreign) Subsidiaries: Mechanisms from Corporate Law, Tort and Regulation’ NUS Law Working Paper 2023/007 (January 2023).

122 Charterbridge (n 94) where the test was whether an intelligent and honest man could have reasonably believed that the transactions were for the benefit of the company.

123 Bolam v Friern Hospital Management Committee [1957] 1 WLR 582 (HC).

124 Bolitho v City and Hackney Health Authority [1988] AC 232 (HL).

125 Although, and to be clear, while there are similarities in the conceptual approach, the level of scrutiny applied to each threshold under corporate law, administrative law and the tort of medical negligence may differ due to the different subject matter at hand.

126 Patrick Hodge, ‘Judicial Law-making in a Changing Constitution’ (2015) 26 Stellenbosch L Rev 471, 471–85 at 479–81 and Patrick Hodge, ‘The Scope of Judicial Law-Making in the Common Law Tradition’ (n 72). See also, Tom Bingham, The Rule of Law (Penguin Publishing, 2011) ch 2.

127 ClientEarth (n 14) [48].

128 See, for example, Vita Health Laboratories Pte Ltd v Pang Seng Meng [2004] 4 SLR(R) 162 (SGHC) [17].

129 GCHQ (n 114) 411.

130 Hii Chii Kok v Ooi Peng Jin London Lucien [2017] 2 SLR 492 (SGCA) [79]–[83].

131 Singapore Companies Act 1967, s 157A. In the UK, this concept remains in the common law: see John Shaw & Sons (Salford) Ltd v Shaw [1935] 2 KB 113 (CA), although the default Article 3 of The Companies (Model Articles) Regulation 2008 expressly provides for this unless this is altered by the company, see section 20 of the CA 2006.

132 See, for example, Article 83 in the First Schedule of the Singapore Companies (Model Constitutions) Regulations 2015.

133 Ezion Holdings Ltd v Teras Cargo Transport Pte Ltd [2016] 5 SLR 226 (SGHC).

134 Singapore Companies Act 1967, s 203; UK Companies Act 2006, s 423.

135 Part 5, Division 3, Singapore Companies Act 1967; Part 13, Chapter 3, UK Companies Act 2006.

136 Howard Smith v Ampol [1974] AC 821 (PC) 832.

137 Singapore Companies Act 1967, s 216A; UK Companies Act 2006, s 261.

138 As discussed in section 2 of this article.

139 Singapore Companies Act 1967, s 180; UK Companies Act 2006, s 310.

140 See, for example, Sam Meredith, ‘“Go to hell, Shell”: Climate Protesters Try to Storm Stage at Oil Giant’s Annual Shareholders Meeting’ (CNBC, 23 May 2023) <https://www.cnbc.com/2023/05/23/oil-giant-shell-braces-for-shareholder-revolt-over-climate-plans.html>.

141 Singapore Companies Act 1967, s 176–177; UK Companies Act 2006, s 303–306.

142 Singapore Companies Act 1967, s 149B and 152; UK Companies Act 2006, s 168.

143 TYC Investment Pte Ltd v Tay Yun Chwan Henry [2014] 4 SLR 1149 (SGHC). See also Paul Davies, Gower (n 98) [11-006]–[11-010].

144 See David Kershaw, Principles of Takeover Regulation (Oxford University Press 2016) Ch 1.

145 As discussed in section 2 of this article.

146 Reinier Kraakman and others, The Anatomy of Corporate Law: A Comparative and Functional Approach (3rd edn, Oxford University Press 2017) ch 3.

147 As discussed in section 3.A of this article.

148 That is not to say that directors have free rein to ignore these stakeholders. The prudent director would likely recognize that there is inherent value with such engagements, especially where the cooperation of key stakeholders would be essential to the success of the company, and that doing so would be in line with his duty to act in the company’s best interests.

149 As discussed in section 2 of this article.

150 See, for example, Cinnamon Piñon Carlarne, ‘The Essential Role of Climate Litigation and the Courts in Averting Climate Crisis’ in Benoit Mayer and Alexander Zahar (eds), Debating Climate Law (Cambridge University Press 2021) 111 and Laura Burgers, ‘Should Judges Make Climate Change Law?’ (2020) 9(1) Transnational Environmental Law 55.

151 Patrick Hodge, ‘Judicial Law-making in a Changing Constitution’ (n 126) 479–81 and Patrick Hodge, ‘The Scope of Judicial Law-Making in the Common Law Tradition’ (n 72).

152 See, for example, Guy Dwyer, ‘Climate Litigation: A Red Herring among Climate Mitigation Tools’ in Benoit Mayer and Alexander Zahar (eds), Debating Climate Law (Cambridge University Press 2021) 111. See also the Singapore Court of Appeal’s comments on its constitutional role in Tan Seng Kee v Attorney-General [2022] 1 SLR 1347 [1]–[12].

153 ClientEarth (n 14) [56]–[58]. See also the Australian case of Sharma v Minister for the Environment [2021] FCA 560 where the court found that the government owed a duty of care to prevent climate harm but declined to order an injunction against the government approving a coal mine proposal.

154 It has been argued that other avenues such as the directors’ duty to act for proper purposes or the public enforcement of securities law may be more appropriate to enforce stakeholders’ interests. See Hans Tjio, ‘Sustainable Directors’ Duties and Reasonable Shareholders’ NUS Law Working Paper 2023/016 (May 2023), forthcoming in European Business Organisation Law Review; Ernest Lim and Umakanth Varottil, ‘Climate Risk: Enforcement of Corporate and Securities Law in Common Law Asia’ (2022) 22(1) Journal of Corporate Law Studies 391.

155 Sequana (n 13) [244], [250] and [266].

156 Foss v Harbottle (1843) 2 Hare 461, 1843) 67 ER 189 (Ch). This is also provided for in statute: Singapore Companies Act 1967, s 216A; UK Companies Act 2006, s 261.

157 ClientEarth (n 14) [65] and [69].

158 ibid [61]–[65].

159 ibid [67]–[71].

160 HC Surgical (n 15) [68]–[70] citing Ang Thiam Swee (n 81) (SGCA) [30]–[31].

161 ibid [71]–[76].

162 ibid [77].

163 UK Corporate Governance Code 2018, Principles D and G. Provision 11 also requires half the board to be independent; SG Code of Corporate Governance 2016, Principle 2.

164 UK Companies Act 2006, s 414A-D; SGX Listing Rule 711A. In addition, SGX has recently commenced consultations on further refinements to bring the disclosure obligations found in the SGX Listing Rules in line with international standards. See Sustainability Reporting Advisory Committee, Turning Climate Ambition into Action in Singapore – Recommendations by the Sustainability Reporting Advisory Committee (Consultation Paper, July 2023).

165 UK Corporate Governance Code 2018, Principles D. Provisions 3 and 5 requires directors to engage with shareholders outside formal general meetings and disclose how they have considered the interests of stakeholders; SG Code of Corporate Governance 2016, Principles 11 and 12. Provision 11.3 specifically requires directors to attend general meetings and Provision 12.1 requires directors to disclose how they have sought to solicit and understand the views of shareholders.

166 As discussed in section 3.C of this article.

Additional information

Funding

This work was supported by the EW Barker Centre for Law & Business, National University of Singapore.

Notes on contributors

Luh Luh Lan

Luh Luh Lan is an Associate Professor of corporate law at the Faculty of Law, National University of Singapore. She researches in the areas of corporate law, corporate finance and securities market law and corporate governance and publishes in both law and management journals. She is a board member of the International Corporate Governance Society and a research member of the European Corporate Governance Institute.

Walter Wan

Walter Wan is a visiting researcher with the EW Barker Centre for Law & Business, Faculty of Law, National University of Singapore. His research interests lie primarily in corporate law, specifically corporate governance, and financial regulations. He currently divides his time between research and legal practice and is constantly on the lookout for fresh developments in corporate practice that could benefit from increased clarity through legal research.