UPDATE 3-Singapore Exchange proposes rule change to help investors call special meetings

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Company boards need to act within 21 days of getting a notice

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Rule change to improve corporate governance practices

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Companies need to hear what the market is asking for - SGX RegCo CEO

(Updates with analyst comments in paragraphs 7 and 8)

April 23 (Reuters) - Singapore Exchange is proposing a rule change to help shareholders call special general meetings as the city-state attempts to enhance corporate governance practices, the bourse's regulatory arm said on Tuesday.

Singapore-listed firms currently have no regulatory obligation to respond to shareholder calls for special general meetings, and domestic companies have historically not granted such requests.

Under the proposal, listed firms will be required to take certain action within 21 days to hold a meeting after a set of shareholders, or even one shareholder who owns at least 10% stake, makes a request.

Any company that disputes the validity of the notice must apply for a court ruling within the same timeline, SGX RegCo said in a statement on its website.

Public consultation on the proposal is open till May 23.

"If investors have a stronger say, companies will be more motivated to consider their interests by improving both operational performance and shareholder returns," SGX RegCo CEO Tan Boon Gin said, adding that companies need to hear what the market is asking for.

The new rule could come as a positive step in trying to improve corporate governance "given the declining trend in the number of SGX listings, the relatively weaker valuation and the perception of a general lack of liquidity in some areas of the markets," said Yeap Jun Rong, market strategist at IG.

"From the companies' perspective, they may find it burdensome if frequent special meetings were to be called and whether this will translate to actual better shareholder returns and improved valuation may still largely await to be seen."

Singapore has been making efforts to improve corporate governance after a recent surge in investor activism locally and among global firms.

In January 2023, the bourse implemented new rules for better transparency in payment details for companies' CEOs and individual directors.

SGX RegCo is currently also working on strengthening the board of firms to enhance performance and also to reduce market friction, the bourse regulator added in the statement. (Reporting by Rishav Chatterjee in Bengaluru; additional reporting by Ankur Banerjee in Singapore; Editing by Shilpi Majumdar, Rashmi Aich and Varun H K)