Corporate Governance Review: STO leads in compliance with 97.5 percent

State Trading Organization Plc (STO) has achieved the highest corporate governance compliance rate among listed companies in the Maldives, recording a compliance level of 97.5 percent in the Capital Market Development Authority’s (CMDA) Corporate Governance Review 2025.

According to the review, STO secured the top position among the eight listed companies assessed by the authority, exceeding the overall market compliance rate of 92.9 percent.

The CMDA’s assessment examined companies’ adherence to the Corporate Governance Code based on their annual reports and audited financial statements for the 2025 financial year.

STO’s strong performance was attributed to a range of governance practices, including director training, internal audit arrangements and disclosures relating to audit partner rotation. The report specifically noted that STO disclosed eight director training programmes completed during the year, with MVR 1.03 million allocated to director training.

The authority also highlighted STO’s internal audit reporting framework, under which the Chief Audit Executive reports functionally to the Chairperson of the Audit and Risk Committee and administratively to the Chief Executive. According to the report, the arrangement facilitates operational access while maintaining the independence of the audit function.

STO was also one of two listed companies recognised for publishing sustainability disclosures with reference to international frameworks. This places the company among those preparing for the implementation of mandatory sustainability reporting requirements under the Maldives Sustainability Reporting Framework during the 2026 reporting cycle.

Overall corporate governance compliance among the eight companies assessed stood at 92.9 percent, an increase from 88 percent in 2024 and 86 percent in 2023. However, the CMDA cautioned that year-on-year comparisons should be considered with care due to the decline in the number of companies included in the assessment.

Despite STO’s leading overall performance, the review identified an area where further improvement is required. STO was among three companies whose audit committees did not fulfil the Code’s requirement for at least two members to possess accounting or related financial expertise.

The report further identified audit and internal control as the weakest area of governance across the market, recording a compliance rate of 86.8 percent.

The CMDA stated that the review is intended to strengthen transparency, accountability and investor confidence by encouraging listed companies to move beyond formal compliance and provide clearer reporting on their governance practices and outcomes.