PUBLIC CONSULTATION ON DRAFT CODE OF GOVERNANCE FOR TOWN COUNCILS

Town Councils (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 main functions of a TC are to control, manage, maintain and improve the common property of the HDB residential and commercial properties within its Town for the benefit of residents. A TC is led by a Council that is made up of elected MPs and appointed members. At least two-thirds of the appointed members must be residents of the HDB housing estates within the Town, to ensure that residents’ views are sufficiently represented within the Council. 

2.At the passing of the Town Councils (Amendment) Bill in March 2017, MND had shared that it would be working 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 highlight best practices that can guide the TCs in better executing their fiduciary responsibilities and improving accountability.

3.The Code is based on five guiding principles, namely: 

4.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. Each domain has an overarching general principle, and is further divided into sub-domains. The Code provisions set out best practices which TCs are encouraged to adopt, through a comply-or-explain regime.

5.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. As TCs manage large sums of public monies, TCs are similar to Charities and public sector entities, where there is public expectation for transparency and accountability in the conduct of their activities. On the other hand, TCs undertake relatively complex procurement and operational activities similar to commercial companies. In addition, the Council of a TC performs a governance role akin to that of the Board of Charities and the Board of Directors in a company. However, the appointed members of the Council i.e. the Town Councillors are volunteers who may only receive an allowance for their services, as opposed to a company where Board members may be remunerated for their services. Given these considerations, MND has adapted the provisions accordingly to suit the operating context of TCs.

6.The key provisions in the Code are summarised in the table below. Please refer to the Annex for the full draft Code.