SGX proposes changes to rules on companies' board of directors

One of the changes limits the term of board directors to nine years before renewal.

The Singapore Exchange (SGX) and the Corporate Governance Council launched a public consultation for a set of amendments to the Code of Corporate Governance (Code) that focus on board renewal and diversity disclosures within companies’ board of directors.

According to an announcement, the key proposed amendments to the Code include encouraging board renewal, greater emphasis on disclosures of the relationship between remuneration and value creation, and the need for companies to consider and balance the needs of all stakeholders.

"The independence of any director who has served on the Board beyond nine years from the date of his first appointment should be subject to particularly rigorous review," the council said.

It proposed that companies' boards should also take into account the need for progressive refreshing of the board. The board should also explain why any directors should be considered independent.

A nominating committee (NC) should also be required to evaluate whether the director is independent and whether there are relationships to affect their judgement.

The NC should decide how the board should be evaluated based on comparison with industry peers and how the board has enhance long-term shareholder value.

The council also proposed a diversity policy disclosure requirement, where the board's directors should have an "appropriate balance and diversity" of skills, experience, gender, and knowledge.

"They should also provide core competencies such as accounting or finance, business or management experience, industry knowledge, strategic planning experience and customer-based experience or knowledge," the council added.

The council proposed to clarify the intent of the comply-or-explain regime and the expectations on listed companies’ corporate governance disclosures.

Moreover, the council also proposed establishment of an industry-led Corporate Governance Advisory Committee.

The council and SGX invites interested parties to submit their feedback on the recommendations by 15 March 2018. A copy of the consultation paper is available on the MAS website.