New legal research confirms the true and fair requirement extends across Asia-Pacific

SVI's flagship campaign, the True & Fair Project, has published new legal research examining how the true and fair requirement — or its equivalent — operates across five jurisdictions in the Asia-Pacific region. 

The research was produced in partnership with the Global Alliance of Impact Lawyers (GAIL), a community of lawyers working to use the practice of law to create positive outcomes for people and the planet. We are grateful to the following nine lawyers for their rigorous and detailed analysis:

• Michael Ryland, Jon Cheung, and Allison Strickland (Australia)

• Vivien Teu (Hong Kong)

• Sotaro Hotta (Japan)

• Farez Jinnah (Malaysia)

• Joseph Chun, Sherman Ho, and Walter Yeo (Singapore)

This report builds on a legal opinion published in the UK in 2024, and on subsequent research covering four jurisdictions in the European Union. Taken together, this body of work is establishing a global picture of how existing law requires directors to exercise professional judgement that goes beyond mechanical compliance with accounting standards.

The APAC findings are significant. In four of the five jurisdictions examined (Australia, Hong Kong, Malaysia and Singapore), the true and fair requirement functions as a substantive legal obligation that sits above and alongside the accounting standards in force. Directors in these jurisdictions are expected first to comply with applicable standards, then to add information where necessary to give a true and fair view. In rare circumstances, they should depart from standards where compliance would produce misleading or incomplete financial statements. Singapore and Hong Kong embed this override explicitly in statute; Australia establishes it through case law; Malaysia recognises it in more limited form through its accounting frameworks.

Japan sits apart: its framework references compliance with "generally accepted fair and appropriate accounting practices" and does not provide a mechanism to override those practices in the way other jurisdictions do.

In the four jurisdictions where the requirement applies, a consistent finding emerged: sustainability-related risks and impacts that are financially material are relevant to whether financial statements give a true and fair view. This matters because the way profit is currently calculated typically excludes the costs a company imposes on society, nature, and future generations from the balance sheet. The true and fair requirement invites directors to exercise judgement as to whether the exclusion of those costs means their financial statements fail to give a true and fair view.

The True & Fair Project is working to surface these questions with a range of stakeholders, and this work supports deeper technical research and engagement in the region. As host of this project, SVI is already working with Joint Member Networks, including SIMNA (Social Impact Measurement Network Australia), Social Value Malaysia and Social Value Türkiye, to establish True & Fair ‘hubs’ in their respective regions. We anticipate further partnerships to follow, with the aim to support directors, investors, and civil society in the region to understand what these legal obligations mean in practice — and to use that understanding as a foundation for engagement with the global financial reporting system.