Launch of Code of Governance for Town Councils

The Ministry of National Development (MND) has launched the Code of Governance for Town Councils (TCs), which seeks to promote greater transparency and raise governance standards in TCs. The Code will take effect from FY2020 (1 April 2020), to provide time for TCs to implement the Code provisions.

Background

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 residents1. This allows each Town to develop its own character and identity, reflecting the aspirations of its residents and Town Councillors.

Today, TCs collectively manage about $2 billion worth of public and residents’ monies. 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. In recent years, MND has taken steps to strengthen the regulatory framework for TCs, while ensuring that TCs continue to retain autonomy over their operations.

At the passing of the Town Councils (Amendment) Bill in March 2017, MND had shared that we 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.

MND has worked with our 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. MND also consulted the TCs on the Code in December 2018, and held a public consultation in April 2019. Feedback from these consultations was taken into consideration when formulating the Code.

About the Code

The objectives of the Code are to:

(a) Enhance the effectiveness of TCs by sharing recommended governance practices;

(b) Provide guidance to the Town Councillors to help them carry out their fiduciary duties; and

(c) Improve the transparency of TCs’ operations to build public trust and confidence.

The Code is based on five guiding principles, namely integrity, objectivity, accountability, fairness and transparency. These guiding principles underpin the provisions in the Code, which span four domains: (a) Council Effectiveness, (b) Internal Controls & Processes, (c) Financial Management and (d) Vendor Management (see Annex for details). The Code provisions set out best practices which TCs are encouraged to adopt, through a comply-or-explain regime.

In drafting the Code, MND 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 issued a Governance Disclosure Checklist for the Code. 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.

The first declaration for FY2020 will be due for submission in September 2021. The declaration 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.

1 At least two-thirds of the appointed members of the Council must be residents of the HDB housing estate within the Town.