Banking (Corporate Governance) (Amendment) Regulations 2010

No. S 754

Banking Act

(Chapter 19)

Banking (Corporate Governance) (Amendment) Regulations 2010

In exercise of the powers conferred by section 78 of the Banking Act, the Monetary Authority of Singapore hereby makes the following Regulations:

Citation and commencement

1. These Regulations may be cited as the Banking (Corporate Governance) (Amendment) Regulations 2010 and shall come into operation on 9th December 2010.

Amendment of regulation 2

2. Regulation 2(1) of the Banking (Corporate Governance) Regulations 2005 (G.N. No. S 583/2005) (referred to in these Regulations as the principal Regulations) is amended —

(a)

by inserting, immediately after the definition of “Audit Committee”, the following definition:

“ “board committee” —

(a)	in relation to a bank incorporated in Singapore, means any of the committees specified in regulation 11(1) and the Executive Committee referred to in regulation 10; and
(b)	in relation to a relevant financial holding company, means any of the committees specified in regulation 28(1) and the Executive Committee referred to in regulation 27;”;

(b)

by deleting the definition of “independent director” and substituting the following definition:

“ “independent director”, in relation to a bank in Singapore or a financial holding company, means a director who —

(a)	is independent from any management and business relationship with the bank or financial holding company, as the case may be;
(b)	is independent from any substantial shareholder of the bank or financial holding company, as the case may be; and
(c)	has not served on the board of the bank or financial holding company, as the case may be, for a continuous period of 9 years or longer;”; and

(c)

by inserting, immediately after the definition of “Remuneration Committee”, the following definition:

“ “Risk Management Committee” means a Risk Management Committee referred to in regulation 17A or 34A, as the case may be;”.

Amendment of regulation 7

3. Regulation 7(2) of the principal Regulations is amended by deleting the words “and 17(1)” and substituting the words “, 17(1) and 17A(1)”.

Amendment of regulation 8

4. Regulation 8 of the principal Regulations is amended by deleting the words “or 17(1)” in paragraphs (2)(b) and (i) and (3) and substituting in each case the words “, 17(1) or 17A(1)”.

Amendment of regulation 9

5. Regulation 9 of the principal Regulations is amended —

(a)

by inserting the word “and” at the end of paragraph (1)(a);

(b)

by deleting sub-paragraphs (b), (c) and (d) of paragraph (1) and substituting the following sub-paragraph:

“(b)	at least a majority of directors who are independent directors.”;

(c)

by deleting paragraph (2) and substituting the following paragraph:

“(2) Where a single substantial shareholder holds 50% or more of the share capital or the voting power in a bank incorporated in Singapore, paragraph (1)(b) shall not apply to the bank only if the bank has a board of directors comprising —

(a)	at least a majority of directors who are independent from management and business relationships with the bank; and
(b)	at least one-third of directors who are independent directors.”;

(d)

by deleting the words “14 days of” in paragraph (3)(a) and substituting the words “14 days after”; and

(e)

by inserting, immediately paragraph (6), the following paragraph:

“(6A) Any bank which contravenes paragraph (3)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.”.

Amendment of regulation 11

6. Regulation 11 of the principal Regulations is amended —

(a)

by deleting the word “and” at the end of paragraph (1)(b);

(b)

by deleting the full-stop at the end of sub-paragraph (c) of paragraph (1) and substituting the words “; and”, and by inserting immediately thereafter the following sub-paragraph:

“(d)	a Risk Management Committee.”;

(c)

by inserting, immediately after paragraph (1), the following paragraph:

“(1A) A bank incorporated in Singapore shall ensure that every member of each Committee referred to in paragraph (1) shall have unfettered access to information which the bank is in possession of or has access to, for the purposes of carrying out the responsibilities of the Committee concerned.”;

(d)

by deleting the words “a Nominating Committee or a Remuneration Committee” in paragraph (2) and substituting the words “a Nominating Committee, a Remuneration Committee or a Risk Management Committee”;

(e)

by deleting the words “the Nominating Committee or the Remuneration Committee” in paragraph (2)(a) and (b) and substituting in each case the words “the Nominating Committee, the Remuneration Committee or the Risk Management Committee”; and

(f)

by inserting, immediately after the words “paragraph (1)” in paragraph (3), the words “or (1A)”.

Amendment of regulation 12

7. Regulation 12 of the principal Regulations is amended —

(a)

by inserting the word “and” at the end of paragraph (1)(a);

(b)

by deleting sub-paragraphs (b), (c) and (d) of paragraph (1) and substituting the following sub-paragraph:

“(b)	at least a majority of directors (including the chairman of the Nominating Committee) who are independent directors.”;

(c)

by deleting paragraph (2) and substituting the following paragraph:

(a)	at least a majority of directors who are independent from management and business relationships with the bank; and
(b)	at least one-third of directors (including the chairman of the Nominating Committee) who are independent directors.”;

(d)

by deleting paragraph (4) and substituting the following paragraph:

“(4) If a member of the Nominating Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Nominating Committee —

(a)	the bank shall notify the Authority of the event within 14 days after the occurrence of the event; and
(b)	if this results in a breach of any requirement under paragraph (1), the board of directors shall, within 3 months after that event, appoint such number of new members as may be necessary to rectify the composition of the Nominating Committee in accordance with that requirement.”;

(e)

by inserting, immediately after paragraph (4), the following paragraph:

“(4A) Where before 9th December 2010, a bank incorporated in Singapore has appointed, as the chairman of its Nominating Committee, any person who is not independent from any substantial shareholder of the bank or who has served on the board of the bank for a continuous period of 9 years or longer, the bank shall not be prohibited from re-appointing that person as chairman of the Nominating Committee immediately upon the expiry of the earlier term of appointment.”; and

(f)

by inserting, immediately after paragraph (5), the following paragraph:

“(6) Any bank which contravenes paragraph (4)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.”.

Amendment of regulation 13

8. Regulation 13 of the principal Regulations is amended —

(a)

by deleting sub-paragraphs (b) and (c) of paragraph (1) and substituting the following sub-paragraphs:

“(b)	each member of each board committee;
(c)	the chief executive officer and deputy chief executive officer;
(d)	the chief financial officer; and
(e)	the chief risk officer,”;

(b)

by deleting the words “and 17(1)” in paragraph (3)(a) and substituting the words “, 17(1) and 17A(1)”;

(c)

by inserting, immediately after the words “age, experience, capabilities” in paragraph (3)(b), the word “, skills”; and

(d)

by inserting, immediately after paragraph (3), the following paragraph:

“(3A) The Nominating Committee shall review the reasons provided by each of the persons referred to in paragraph (1) for his resignation from his appointment in the bank.”.

Amendment of regulation 14

9. Regulation 14 of the principal Regulations is amended —

(a)

by deleting the word “and” at the end of sub-paragraph (a) of paragraph (2), and by inserting immediately thereafter the following sub-paragraph:

“(aa)

shall review and assess whether each existing director remains qualified for the office using the criteria set out in regulation 13(3); and”;

(b)

by inserting, immediately after the words “a record of its determination” in paragraph (2)(b), the words “and its assessment, respectively”; and

(c)

by deleting the regulation heading and substituting the following regulation heading:

“Determination of independence of directors and assessment of qualification”.

Amendment of regulation 15

10. Regulation 15(1) of the principal Regulations is amended by inserting, immediately after sub-paragraph (a), the following sub-paragraph:

“(aa)

notify the Authority in writing of the review and assessment of each existing director referred to in regulation 14(2)(aa);”.

Amendment of regulation 16

11. Regulation 16 of the principal Regulations is amended —

(a)

by inserting the word “and” at the end of paragraph (1)(a);

(b)

by deleting sub-paragraphs (b), (c) and (d) of paragraph (1) and substituting the following sub-paragraph:

“(b)	at least a majority of directors (including the chairman of the Remuneration Committee) who are independent directors.”;

(c)

by deleting paragraph (2) and substituting the following paragraph:

(a)	at least a majority of directors who are independent from management and business relationships with the bank; and
(b)	at least one-third of directors (including the chairman of the Remuneration Committee) who are independent directors.”;

(d)

by deleting paragraph (3) and substituting the following paragraphs:

“(3) In addition to such other responsibilities as may be determined by the board of directors of a bank incorporated in Singapore, the Remuneration Committee of the bank shall be responsible for —

(a)

recommending a framework for determining the remuneration of the directors of the bank;

(b)

recommending a framework for determining the remuneration of the executive officers of the bank which shall include the following elements and factors in the design and operation of the framework:

(i)

the remuneration package of each executive officer of the bank —

(A)	shall be aligned to the specific job functions undertaken by the executive officer and where the executive officer undertakes any of the bank’s control job functions, the remuneration package of that executive officer shall be determined independently of the business functions of the bank;
(B)	shall take into account input from the bank’s control job functions as may be relevant to the specific job function undertaken by the executive officer;
(C)	shall be aligned with the risks that the bank undertakes in its business that is relevant to the specific job function undertaken by the executive officer;
(D)	shall be sensitive to the time horizon of risks that the bank is exposed to which includes ensuring that variable compensation payments shall not be finalised over short periods of time when risks are realised over long periods of time;
(E)	shall, in relation to the quantum of bonus payable to the executive officer, be linked to his personal performance, the performance of his specific job function as a whole and the overall performance of the bank; and
(F)	shall, in relation to the rationale for the mix of cash, equity and other forms of incentives, be justified; and

(ii)

the size of the bonus pool of the bank shall be linked to the overall performance of the bank;

(c)

recommending the remuneration of each director and executive officer of the bank based on the frameworks referred to in sub-paragraphs (a) and (b), respectively; and

(d)

reviewing, at least once in each year, the remuneration practices of the bank to ensure that they are aligned with the recommendations made in accordance with sub-paragraphs (a), (b) and (c).

(3A) In paragraph (3) —

“business functions” means the job functions in the bank that conduct risk-taking activities in relation to the business of the bank;

“control job functions” means the following job functions:

(a)	risk control and management;
(b)	finance;
(c)	compliance;
(d)	internal audit;
(e)	human resources; and
(f)	risk control related back office operations.”;

(e)

by deleting paragraph (5) and substituting the following paragraph:

“(5) If a member of the Remuneration Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Remuneration Committee —

(a)	the bank shall notify the Authority of the event within 14 days after the occurrence of the event; and
(b)	if this results in a breach of any requirement under paragraph (1), the board of directors shall, within 3 months after that event, appoint such number of new members as may be necessary to rectify the composition of the Remuneration Committee in accordance with that requirement.”;

(f)

by deleting paragraph (6) and substituting the following paragraph:

“(6) Where before 9th December 2010, a bank incorporated in Singapore has appointed, as the chairman of its Remuneration Committee, any person who is not an independent director, the bank shall not be prohibited from re-appointing that person as chairman of the Remuneration Committee immediately upon the expiry of the earlier term of appointment.”; and

(g)

by inserting, immediately after paragraph (7), the following paragraph:

“(8) Any bank which contravenes paragraph (5)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.”.

Amendment of regulation 17

12. Regulation 17 of the principal Regulations is amended —

(a)

by deleting paragraph (4) and substituting the following paragraph:

“(4) If a member of the Audit Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Audit Committee —

(a)	the bank shall notify the Authority of the event within 14 days after the occurrence of the event; and
(b)	if this results in a breach of any requirement under paragraph (1), the board of directors shall, within 3 months after that event, appoint such number of new members as may be necessary to rectify the composition of the Audit Committee in accordance with that requirement.”; and

(b)

by inserting, immediately after paragraph (5), the following paragraph:

“(6) Any bank which contravenes paragraph (4)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.”.

New regulation 17A

13. The principal Regulations are amended by inserting, immediately after regulation 17, the following regulation:

“Risk Management Committee

17A.—(1) Subject to paragraph (4) and regulations 8(3) and 22, a bank incorporated in Singapore shall have a Risk Management Committee comprising —

(a)	at least 3 members of the board of directors of the bank; and
(b)	at least a majority of directors (including the chairman of the Risk Management Committee) who are non-executive directors.

(2) The Risk Management Committee shall, in addition to such other responsibilities as may be determined by the board of directors, be responsible for overseeing —

(a)	the establishment and the operation of an independent risk management system for managing risks on an enterprise-wide basis; and
(b)	the adequacy of the risk management function of the bank, including ensuring that it is sufficiently resourced to monitor risk by the various risk categories and that it has appropriate independent reporting lines.

(3) The Risk Management Committee shall maintain records of all its meetings.

(4) If a member of the Risk Management Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Risk Management Committee —

(a)	the bank shall notify the Authority of the event within 14 days after the occurrence of the event; and
(b)	if this results in a breach of any requirement under paragraph (1), the board of directors shall, within 3 months after that event, appoint such number of new members as may be necessary to rectify the composition of the Risk Management Committee in accordance with that requirement.

(5) Any bank which contravenes paragraph (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction.

(6) Any bank which contravenes paragraph (4)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.”.

Amendment of regulation 18

14. Regulation 18 of the principal Regulations is amended —

(a)

by deleting sub-paragraphs (a) to (d) of paragraph (1) and substituting the following sub-paragraphs:

“(a)	all directors and each such appointment shall be for a term not exceeding 3 years;
(b)	the chairman of the board of directors;
(c)	the members of the Nominating Committee;
(d)	the chief executive officer and deputy chief executive officer;
(e)	the chief financial officer; and
(f)	the chief risk officer.”; and

(b)

by inserting, immediately after paragraph (2), the following paragraph:

“(2A) For the purposes of paragraph (1)(f), a bank incorporated in Singapore which has appointed any person as its chief risk officer immediately before 9th December 2010 shall be deemed to have obtained the prior approval of the Authority for that appointment —

(a)	for a period of 3 months from the date on which the bank holds or is required by law to hold its annual general meeting for the year 2011; or
(b)	if, before the expiry of the period referred to in sub-paragraph (a), the bank applies for the approval of the Authority for that appointment, until the date on which the approval is given or the application for approval is refused,

whichever is later.”.

Amendment of regulation 18A

15. Regulation 18A of the principal Regulations is amended —

(a)	by deleting the words “deputy chief executive officer or chief financial officer” in paragraph (1)(a) and substituting the words “deputy chief executive officer, chief financial officer or chief risk officer”; and
(b)	by deleting the words “30 days of” in paragraph (4) and substituting the words “30 days after”.

Amendment of regulation 20

16. Regulation 20 of the principal Regulations is amended —

(a)

by deleting paragraphs (1) and (2) and substituting the following paragraphs:

“(1) Subject to paragraph (2), a bank incorporated in Singapore shall not appoint any of the following persons as the chairman of its board of directors:

(a)	any of its executive directors;
(b)	any person who is a member of the immediate family of the chief executive officer of the bank.

(2) Where before 9th December 2010, a bank incorporated in Singapore has appointed, as the chairman of its board of directors, a person who is a member of the immediate family of the chief executive officer of the bank, the bank shall not be prohibited from re-appointing that person as the chairman of its board of directors —

(a)	for the period from 9th December 2010 until the date on which the bank holds or is required by law to hold its annual general meeting for the year 2011; and
(b)	for the period between every subsequent annual general meetings thereafter subject to the prior written approval of the Authority and such conditions as the Authority may impose.

(2A) The Authority may, at any time, by notice in writing to a bank incorporated in Singapore, vary any condition imposed under paragraph (2)(b), or impose such further condition as it thinks fit, and the bank shall comply with such conditions.”; and

(b)

by inserting, immediately after the words “contravenes paragraph (1)” in paragraph (3), the words “or fails to comply with any condition imposed under paragraph (2)(b) or (2A)”.

Amendment of regulation 22

17. Regulation 22 of the principal Regulations is amended —

(a)	by deleting the words “and 17(1)” in paragraph (1) and substituting the words “, 17(1) and 17A(1)”;
(b)	by deleting the words “14 days of” in paragraph (2) and substituting the words “14 days after”;
(c)	by deleting the words “3 months of” in paragraph (2)(b) and substituting the words “3 months after”; and
(d)	by deleting the words “or 17(1)” in paragraphs (2)(b) and (3)(b) and substituting in each case the words “, 17(1) or 17A(1)”.

Amendment of regulation 24

18. Regulation 24(2) of the principal Regulations is amended by deleting the words “and 34(1)” and substituting the words “, 34(1) and 34A(1)”.

Amendment of regulation 25

19. Regulation 25 of the principal Regulations is amended by deleting the words “or 34(1)” in paragraphs (2) and (3) and substituting in each case the words “, 34(1) or 34A(1)”.

Amendment of regulation 26

20. Regulation 26 of the principal Regulations is amended —

(a)

by inserting the word “and” at the end of paragraph (1)(a);

(b)

by deleting sub-paragraphs (b), (c) and (d) of paragraph (1) and substituting the following sub-paragraph:

“(b)	at least a majority of directors who are independent directors.”;

(c)

by deleting paragraph (2);

(d)

by deleting the words “14 days of” in paragraph (3)(a) and substituting the words “14 days after”; and

(e)

by inserting, immediately after paragraph (7), the following paragraph:

“(8) Any relevant financial holding company which contravenes paragraph (3)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.”.

Amendment of regulation 28

21. Regulation 28 of the principal Regulations is amended —

(a)

by deleting the word “and” at the end of paragraph (1)(b);

(b)

by deleting the full-stop at the end of sub-paragraph (c) of paragraph (1) and substituting the word “; and”, and by inserting immediately thereafter the following sub-paragraph:

“(d)	a Risk Management Committee.”;

(c)

by inserting, immediately after paragraph (1), the following paragraph:

“(1A) A relevant financial holding company shall ensure that every member of each Committee referred to in paragraph (1) shall have unfettered access to information which the relevant financial holding company is in possession of or has access to, for the purposes of carrying out the responsibilities of the Committee concerned.”; and

(d)

by inserting, immediately after the words “paragraph (1)” in paragraph (2), the words “or (1A)”.

Amendment of regulation 29

22. Regulation 29 of the principal Regulations is amended —

(a)

by inserting the word “and” at the end of paragraph (1)(a);

(b)

by deleting sub-paragraphs (b), (c) and (d) of paragraph (1) and substituting the following sub-paragraph:

“(b)	at least a majority of directors (including the chairman of the Nominating Committee) who are independent directors.”;

(c)

by deleting paragraph (2);

(d)

by deleting paragraph (4) and substituting the following paragraph:

“(4) If a member of the Nominating Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Nominating Committee —

(a)	the relevant financial holding company shall notify the Authority of the event within 14 days after the occurrence of the event; and
(b)	if this results in a breach of any requirement under paragraph (1), the board of directors shall, within 3 months after that event, appoint such number of new members as may be necessary to rectify the composition of the Nominating Committee in accordance with that requirement.”; and

(e)

by inserting, immediately after paragraph (5), the following paragraph:

“(6) Any relevant financial holding company which contravenes paragraph (4)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.”.

Amendment of regulation 30

23. Regulation 30 of the principal Regulations is amended —

(a)

by deleting sub-paragraphs (b) and (c) of paragraph (1) and substituting the following sub-paragraphs:

“(b)	each member of each board committee;
(c)	the chief executive officer and deputy chief executive officer;
(d)	the chief financial officer; and
(e)	the chief risk officer,”;

(b)

by deleting the words “and 34(1)” in paragraph (3)(a) and substituting the words “, 34(1) and 34A(1)”;

(c)

by inserting, immediately after the words “age, experience, capabilities” in paragraph (3)(b), the word “, skills”; and

(d)

by inserting, immediately after paragraph (3), the following paragraph:

“(3A) The Nominating Committee shall review the reasons provided by each of the persons referred to in paragraph (1) for his resignation from his appointment in the relevant financial holding company.”.

Amendment of regulation 31

24. Regulation 31 of the principal Regulations is amended —

(a)

by deleting the word “and” at the end of sub-paragraph (a) of paragraph (2), and by inserting immediately thereafter the following sub-paragraph:

“(aa)

shall review and assess whether each existing director remains qualified for the office using the criteria set out in regulation 30(3); and”;

(b)

by inserting, immediately after the words “a record of its determination” in paragraph (2)(b), the words “and its assessment, respectively”; and

(c)

by deleting the regulation heading and substituting the following regulation heading:

“Determination of independence of directors and assessment of qualification”.

Amendment of regulation 32

25. Regulation 32(1) of the principal Regulations is amended by inserting, immediately after sub-paragraph (a), the following sub-paragraph:

“(aa)

notify the Authority in writing of the review and assessment of each existing director referred to in regulation 31(2)(aa);”.

Amendment of regulation 33

26. Regulation 33 of the principal Regulations is amended —

(a)

by inserting the word “and” at the end of paragraph (1)(a);

(b)

by deleting sub-paragraphs (b), (c) and (d) of paragraph (1) and substituting the following sub-paragraph:

“(b)	at least a majority of directors (including the chairman of the Remuneration Committee) who are independent directors.”;

(c)

by deleting paragraph (2);

(d)

by deleting paragraph (3) and substituting the following paragraphs:

“(3) In addition to such other responsibilities as may be determined by the board of directors of the relevant financial holding company, the Remuneration Committee of the relevant financial holding company shall be responsible for —

(a)

recommending a framework for determining the remuneration of the directors of the relevant financial holding company;

(b)

recommending a framework for determining the remuneration of the executive officers of the relevant financial holding company which include the following elements and factors in the design and operation of the framework:

(i)

the remuneration package of each executive officer of the relevant financial holding company —

(A)	shall be aligned to the specific job functions undertaken by the executive officer and where the executive officer undertakes any of the relevant financial holding company’s control job functions, the remuneration package of that executive officer shall be determined independently of the business functions of the relevant financial holding company;
(B)	shall take into account input from the relevant financial holding company’s control job functions as may be relevant to the specific job function undertaken by the executive officer;
(C)	shall be aligned with the risks that the relevant financial holding company undertakes in its business that is relevant to the specific job function undertaken by the executive officer;
(D)	shall be sensitive to the time horizon of risks that the relevant financial holding company is exposed to which includes ensuring that variable compensation payments shall not be finalised over short periods of time when risks are realised over long periods of time;
(E)	shall, in relation to the quantum of bonus payable to the executive officer, be linked to his personal performance, the performance of his specific job function as a whole and the overall performance of the relevant financial holding company; and
(F)	shall, in relation to the rationale for the mix of cash, equity and other forms of incentives, be justified; and

(ii)

the size of the bonus pool of the relevant financial holding company shall be linked to the overall performance of the relevant financial holding company;

(c)

recommending the remuneration of each director and executive officer of the relevant financial holding company based on the frameworks referred to in sub-paragraphs (a) and (b), respectively; and

(d)

reviewing, at least once in each year, the remuneration practices of the relevant financial holding company to ensure that they are aligned with the recommendations made in accordance with sub-paragraphs (a), (b) and (c).

(3A) In paragraph (3) —

“business functions” means the job functions in the relevant financial holding company that conduct risk-taking activities in relation to the business of the relevant financial holding company;

“control job functions” means the following job functions:

(a)	risk control and management;
(b)	finance;
(c)	compliance;
(d)	internal audit;
(e)	human resources; and
(f)	risk control related back office operations.”;

(e)

by deleting paragraph (5) and substituting the following paragraph:

“(5) If a member of the Remuneration Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Remuneration Committee —

(a)	the relevant financial holding company shall notify the Authority of the event within 14 days after the occurrence of the event; and
(b)	if this results in a breach of any requirement under paragraph (1), the board of directors shall, within 3 months after that event, appoint such number of new members as may be necessary to rectify the composition of the Remuneration Committee in accordance with that requirement.”;

(f)

by inserting, immediately after paragraph (5), the following paragraph:

“(5A) Where before 9th December 2010, a relevant financial holding company has appointed, as the chairman of its Remuneration Committee, any person who is not independent from any substantial shareholder of the relevant financial holding company or who has served on the board of the relevant financial holding company for a continuous period of 9 years or longer, the relevant financial holding company shall not be prohibited from re-appointing that person as chairman of the Remuneration Committee immediately upon the expiry of the earlier term of appointment.”; and

(g)

by inserting, immediately after paragraph (6), the following paragraph:

“(7) Any relevant financial holding company which contravenes paragraph (5)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.”.

Amendment of regulation 34

27. Regulation 34 of the principal Regulations is amended —

(a)

by deleting paragraph (4) and substituting the following paragraph:

“(4) If a member of the Audit Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Audit Committee —

(a)	the relevant financial holding company shall notify the Authority of the event within 14 days after the occurrence of the event; and
(b)	if this results in a breach of any requirement under paragraph (1), the board of directors shall, within 3 months after that event, appoint such number of new members as may be necessary to rectify the composition of the Audit Committee in accordance with that requirement.”; and

(b)

by inserting, immediately after paragraph (5), the following paragraph:

“(6) Any relevant financial holding company which contravenes paragraph (4)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.”.

New regulation 34A

28. The principal Regulations are amended by inserting, immediately after regulation 34, the following regulation:

“Risk Management Committee

34A.—(1) Subject to paragraph (4) and regulations 25(3) and 38, a relevant financial holding company shall have a Risk Management Committee comprising —

(a)	at least 3 members of the board of directors of the relevant financial holding company; and
(b)	at least a majority of directors (including the chairman of the Risk Management Committee) who are non-executive directors.

(2) The Risk Management Committee shall, in addition to such other responsibilities as may be determined by the board of directors, be responsible for overseeing —

(a)	the establishment and the operation of an independent risk management system for managing risks on an enterprise-wide basis; and
(b)	the adequacy of the risk management function of the relevant financial holding company, including ensuring that it is sufficiently resourced to monitor risk by the various risk categories and that it has appropriate independent reporting lines.

(3) The Risk Management Committee shall maintain records of all its meetings.

(4) If a member of the Risk Management Committee resigns, ceases to be a director or for any other reason ceases to be a member of the Risk Management Committee —

(a)	the relevant financial holding company shall notify the Authority of the event within 14 days after the occurrence of the event; and
(b)	if this results in a breach of any requirement under paragraph (1), the board of directors shall, within 3 months after that event, appoint such number of new members as may be necessary to rectify the composition of the Risk Management Committee in accordance with that requirement.

(5) Any relevant financial holding company which contravenes paragraph (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction.

(6) Any relevant financial holding company which contravenes paragraph (4)(a) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000.”.

Amendment of regulation 35

29. Regulation 35 of the principal Regulations is amended —

(a)

by deleting sub-paragraphs (a) to (d) of paragraph (1) and substituting the following sub-paragraphs:

“(a)	all directors and each such appointment shall be for a term not exceeding 3 years;
(b)	the chairman of the board of directors;
(c)	the members of the Nominating Committee;
(d)	the chief executive officer and deputy chief executive officer;
(e)	the chief financial officer; and
(f)	the chief risk officer.”; and

(b)

by inserting, immediately after paragraph (2), the following paragraph:

“(2A) For the purposes of paragraph (1)(f), a relevant financial holding company which has appointed any person as its chief risk officer immediately before 9th December 2010 shall be deemed to have obtained the prior approval of the Authority for that appointment —

(a)	for a period of 3 months from the date on which the relevant financial holding company holds or is required by law to hold its annual general meeting for the year 2011; or
(b)	if, before the expiry of the period referred to in sub-paragraph (a), the relevant financial holding company applies for the approval of the Authority for that appointment, until the date on which the approval is given or the application for approval is refused,

whichever is later.”.

New regulation 35A

30. The principal Regulations are amended by inserting, immediately after regulation 35, the following regulation:

“Removal of principal officers

35A.—(1) Where —

(a)

the Authority is satisfied that a chief executive officer, deputy chief executive officer, chief financial officer or chief risk officer of a relevant financial holding company (referred to in this regulation as officer) —

(i)	has wilfully contravened or wilfully caused the relevant financial holding company to contravene any provision of these Regulations;
(ii)	has, without reasonable excuse, failed to secure the compliance of the relevant financial holding company with any provision of these Regulations; or
(iii)	has failed to discharge any of the duties of his office; or

(b)

such officer has had —

(i)	execution against him in respect of a judgment debt returned unsatisfied in whole or in part; or
(ii)	a prohibition order under section 59 of the Financial Advisers Act (Cap. 110), section 35V of the Insurance Act (Cap. 142) or section 95 of the Securities and Futures Act (Cap. 289) made against him that remains in force,

the Authority may, if it thinks it necessary in the public interest, by notice in writing to the relevant financial holding company, direct the relevant financial holding company to remove the officer from office or employment within such period as may be specified in the notice, and the relevant financial holding company shall comply with the notice.

(2) Before directing a relevant financial holding company to remove the officer under paragraph (1), the Authority shall —

(a)	give the relevant financial holding company and the officer notice in writing of its intention to do so; and
(b)	in the notice referred to in sub-paragraph (a), call upon the relevant financial holding company and the officer to show cause within such time as may be specified in the notice why the officer should not be removed.

(3) If the relevant financial holding company and the officer referred to in paragraph (1) —

(a)	fail to show cause within the time specified in a notice issued under paragraph (2) or within such extended period of time as the Authority may allow; or
(b)	fail to show sufficient cause,

the Authority may direct the relevant financial holding company to remove the officer under paragraph (1).

(4) Any relevant financial holding company which, or any officer of a relevant financial holding company who, is aggrieved by a direction of the Authority under paragraph (1) may, within 30 days after the direction, appeal in writing to the Minister whose decision shall be final.

(5) Any relevant financial holding company which fails to comply with a notice issued under paragraph (1) shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $25,000 and, in the case of a continuing offence, to a further fine not exceeding $2,500 for every day or part thereof during which the offence continues after conviction.”.

Amendment of regulation 37

31. Regulation 37 of the principal Regulations is amended by deleting paragraph (1) and substituting the following paragraph:

“(1) A relevant financial holding company shall not appoint any of the following persons as the chairman of its board of directors:

(a)	any of its executive directors;
(b)	any person who is a member of the immediate family of the chief executive officer of the relevant financial holding company.”.

Amendment of regulation 38

32. Regulation 38 of the principal Regulations is amended —

(a)	by deleting the words “and 34(1)” in paragraph (1) and substituting the words “, 34(1) and 34A(1)”;
(b)	by deleting the words “14 days of” in paragraph (2) and substituting the words “14 days after”;
(c)	by deleting the words “3 months of” in paragraph (2)(b) and substituting the words “3 months after”; and
(d)	by deleting the words “or 34(1)” in paragraphs (2)(b) and (3)(b) and substituting in each case the words “, 34(1) or 34A(1)”.

Deletion of Part V

33. Part V of the principal Regulations is deleted.

Savings and transitional provisions

34.—(1) Subject to paragraph (2), regulations 2 to 17 shall not apply to a bank incorporated in Singapore which conducted banking business in Singapore immediately before 9th December 2010 for the period from that date to the date on which the annual general meeting of the bank is held in 2011.

(2) Regulations 2(b), 5(a), (b) and (c), 7(a), (b), (c) and (e) and 11(a), (b), (c) and (f) shall not apply to a bank incorporated in Singapore which conducted banking business in Singapore immediately before 9th December 2010 for the period from that date to the date on which the annual general meeting of the bank is held in 2012.

(3) During the period referred to in paragraph (1) or (2), as the case may be, the bank incorporated in Singapore referred to in that paragraph shall continue to comply with the principal Regulations that are applicable to it and in force immediately before 9th December 2010.

(4) Subject to paragraph (5), regulations 2 and 18 to 32 shall not apply to a relevant financial holding company which was a relevant financial holding company immediately before 9th December 2010 for the period from that date to the date on which the annual general meeting is held by the relevant financial holding company in 2011.

(5) Regulations 2(b), 20(a), (b) and (c), 22(a), (b) and (c) and 26(a), (b), (c) and (f) shall not apply to a relevant financial holding company which was a relevant financial holding company immediately before 9th December 2010 for the period from that date to the date on which the annual general meeting of the relevant financial holding company is held in 2012.

(6) During the period referred to in paragraph (4) or (5), as the case may be, the relevant financial holding company referred to in that paragraph shall continue to comply with the principal Regulations that are applicable to it and in force immediately before 9th December 2010.

(7) The directors, chairman of the board of directors, members of the Nominating Committee, chief executive officer, deputy chief executive officer and chief financial officer appointed as such by a bank incorporated in Singapore which conducted banking business in Singapore immediately before 9th December 2010, under regulation 18 of the principal Regulations read with paragraph (1) and regulation 14 of these Regulations, immediately before the date on which the annual general meeting of the bank is held in 2011, shall be deemed to continue to hold their appointments in the bank under regulation 18 of the principal Regulations read with paragraph (1) and regulation 14 of these Regulations, after the date on which the annual general meeting of the bank is held in 2011.

(8) The directors, chairman of the board of directors, members of the Nominating Committee, chief executive officer, deputy chief executive officer and chief financial officer appointed as such by a relevant financial holding company which was a relevant financial holding company immediately before 9th December 2010, under regulation 35 of the principal Regulations read with paragraph (4) and regulation 29 of these Regulations, immediately before the date on which the annual general meeting of the relevant financial holding company is held in 2011, shall be deemed to continue to hold their appointments in the relevant financial holding company under regulation 35 of the principal Regulations read with paragraph (4) and regulation 29 of these Regulations, after the date on which the annual general meeting of the relevant financial holding company is held in 2011.

[G.N. No. S 239/2007]

Made this 7th day of December 2010.

TEO SWEE LIAN

Acting Managing Director,
Monetary Authority of Singapore.

[FSG BK 01/2010; AG/LLRD/SL/19/2010/3Vol. 1]

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