SECTION 3: NOMINATION AND APPOINTMENT PROCESS

44 | Nominating Committee Guide • A listed company must have an AC with at least three members 21 , all of whom are non-executive 22 and the majority of whom, including the AC Chairman, are independent 23 . 3.4.8 The third consideration for Board composition is the makeup of its members. Having the right balance and diversity is important. This is covered in Section 3.5 of this Guide. 3.5 Board Diversity 3.5.1 Diversity is a key ingredient for an effective Board. Under the Code, the Board and its Board Committees should comprise directors “who, as a group provide the appropriate balance and mix of skills, knowledge, experience, and other aspects of diversity such as gender and age so as to avoid groupthink and foster constructive debate 24 ”. It goes further to require the Board to have and disclose its “board diversity policy and progress made towards implementing the board diversity policy, including objectives” in the company’s annual report. 3.5.2 The NC and Board should consider several dimensions of diversity: • Skill competencies (including experience and industry backgrounds). • Gender. 21 Section 201B of the Companies Act, MR 704(8), and CR 704(7). 22 Provision 10.2 of the Code. 23 Section 201B(2) of the Companies Act provides that “an audit committee shall be appointed by the directors from among their number (pursuant to a resolution of the board of directors) and shall be composed of 3 or more members of whom a majority shall not be — (a) executive directors of the company or any related corporation; (b) a spouse, parent, brother, sister, son or adopted son or daughter or adopted daughter of an executive director of the company or of any related corporation; or (c) any person having a relationship which, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the functions of an audit committee”. 24 Provision 2.4 of the Code. 3A-3 3B-1