MND launches Code of Governance for Town Councils to promote greater transparency and raise governance standards

The Ministry of National Development (MND) has announced the launch of the Code of Governance for Town Councils (TCs), which aims to promote greater transparency and raise governance standards in TCs.

The ministry stated that the Code will take effect from FY2020 (1 April 2020) to provide time for TCs to implement the Code provisions. Earlier at the passing of the Town Councils (Amendment) Bill in March 2017, MND said that it would work with the TCs to develop a Code of Governance (“Code”) for TCs.

“The Code would complement the existing legislative framework by setting out principles of good governance and highlighting best practices to guide the TCs in better executing their fiduciary responsibilities and improving accountability,” the ministry said.

TCs were formed in 1989 to give elected Members of Parliament (MPs) the autonomy and latitude to run their own Towns, in partnership with the residents. The government claims that this allows each Town to develop its own character and identity, reflecting the aspirations of its residents and Town Councillors. But critics say the TCs are to politicise the estate so as to make it harder for voters to vote for any political parties other than the incumbent party.

Today, TCs collectively manage about $2 billion worth of public and residents’ monies. MND states that as public institutions entrusted with significant amounts of public funds, TCs should have good governance and management controls in place to remain transparent and accountable to their residents.

MND has worked with its appointed consultant, Ernst & Young Advisory Pte Ltd (EY), to draft the Code, and consulted an Advisory Panel, comprising experienced academics, governance experts and industry practitioners, for their expert views and perspectives during the drafting process.

It also shared that it had consulted the TCs on the Code earlier in December 2018, and held a public consultation in April 2019. Feedback from these consultations was said to have been taken into consideration when formulating the Code.

It is claimed that the objectives of the Code will enhance the effectiveness of TCs by sharing recommended governance practices, provide guidance to the Town Councillors to help them carry out their fiduciary duties, and improve the transparency of TCs’ operations to build public trust and confidence.

MND said that the Code is based on five guiding principles, namely integrity, objectivity, accountability, fairness and transparency. It further notes that these guiding principles underpin the provisions in the Code, which span four domains, which are council effectiveness, internal controls and processes, financial management and vendor management.

The ministry added that the Code provisions set out best practices which TCs are encouraged to adopt, through a comply-or-explain regime.

In drafting the Code, MND noted that it has taken reference from the Code of Charities and Institutions of Public Character, and the Code of Corporate Governance where appropriate, and adapted the provisions to suit the unique operating context of TCs. MND has also sought to introduce more robust governance standards whilst being mindful of the cost of compliance and the differences in operating circumstances across TCs.

To facilitate TCs’ declarations of compliance, MND has also issued a Governance Disclosure Checklist for the Code.

The ministry stressed that TCs must declare their compliance with the Code provisions using this Checklist, and submit the Checklist to MND annually.

Where TCs opt not to comply or are in the process of working towards compliance with certain provisions, TCs will be required to provide meaningful explanations on how the governance standards in the Code are achieved, MND noted.

The first declaration for FY2020 will be due for submission in September 2021, which will be made available for public viewing on the MND website.

“MND will work closely with TCs to assist them to attain the desired governance standards,” it added.