Corporate governance (CG) refers to mechanisms, policies, and structures through which a company is directed and controlled. Contrary to popular belief, good governance isn’t the preserve of large listed corporations—it’s equally critical for SMEs, particularly in structured business environments like Singapore.
Defining Corporate Governance and Its Principles
Good CG is built upon:
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Accountability: clear delineation of roles between shareholders, the board, and management.
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Transparency: timely and accurate disclosure of corporate information.
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Fairness: equitable treatment of all stakeholders.
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Responsibility: ethical operations and long-term value focus.
In Singapore, the board, management team, and shareholders must adhere to governance obligations under the Companies Act and ACRA guidelines.
Importance for SMEs in Singapore
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Builds Investor Confidence: Transparent governance attracts funding and supports smoother funding rounds.
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Improves Compliance: Helps SMEs stay aligned with evolving regulatory expectations—mitigating sanctions and compliance risk.
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Enables Long-term Growth: Instills strategic discipline, risk control, and sustainability mindset.
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Enhances Reputation: Governance practices that incorporate ESG (Environmental, Social, and Governance) appeal to a modern stakeholder base.
Best Practices for SME Governance
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Board Composition: Where possible, include independent directors or advisors—enhancing impartial oversight and diverse viewpoints.
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Spend Analytics: Tools help company secretaries identify anomalies, improve transparency, and support decision-making.
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Digitised Reporting: Use software for real-time bookkeeping, compliance tracking, and governance dashboards.
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Adopt Governance Frameworks: Leverage codes like the Singapore Code of Corporate Governance to craft internal policies.
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ESG Integration: Embed environmental responsibility and societal impact into governance to strengthen resilience and appeal.
Local Example
Companies like Temasek and City Developments Limited (CDL) exemplify governance excellence—embedding sustainability and transparency into operations. CDL’s board disputes in 2025 highlighted how governance missteps can strain confidence, while its sustainability achievements reflect positive governance impact.
Growing Emphasis on Governance
Regulatory bodies like SGX are encouraging structures that empower shareholders to hold board-level accountability—e.g., proposals for 10% shareholders to call special meetings, reinforcing governance norms.
Conclusion
Good corporate governance, far from being bureaucratic, is a strategic asset for SMEs—driving trust, resilience, and scalable growth. Starting with clear roles, transparent processes, and digital support lays a foundation for long-term success.