SECTION 3: NOMINATION AND APPOINTMENT PROCESS

Section 3: Nomination and Appointment Process | 51 The factors listed above also apply to current directors. The NC should evaluate, at least once a year, whether a director is able to commit enough time to properly discharge his responsibilities while holding other Board seats or principal commitments. 3.6.9 When a candidate has held an executive position in the company, the NC should consider the potential impact of such employment on his independence and ability to contribute to the oversight responsibility of the Board as an ID. The type and duration of the position held, and the impact this may have on the dynamics with the other staff of the company are also relevant considerations. Where a candidate was a former executive or founder of the company and was involved in making key decisions for the company, he should be deemed to be a non-ID upon appointment. This makes him either an ED (if he is employed) or a NI-NED. In any case, the candidate’s appointment as director will impact the number and ratio of IDs to total number of directors. 3.6.10 The NC should meet with each shortlisted candidate to assess the candidate and address any questions or concerns on either side. Prior to recommending a candidate, due diligence should be conducted. This includes checks on past litigations (and their status), bankruptcy records, and independent reference checks. 3.6.11 After its search and evaluation, the NC should recommend the nomination of successful candidates to the Board 31 . 31 MR 210(5)(d) /CR 406(3)(d) specifies that a director should be considered non-independent when: (i) he is an employee of the company or its related corporation in the current or past three financial years, (ii) his immediate family member is similarly employed and whose remuneration is determined by the RC, (iii) he is a substantial shareholder or has an immediate family member who is a substantial shareholder, or (iv) he has served on the Board for an aggregate period of more than 9 years before or after listing and his continued appointment as an ID has not been sought and approved by two separate votes of (A) all shareholders and (B) all shareholders excluding the CEO, directors, and associates of the CEO and directors. Note that the nine-year rule sets out in MR 210(5)(d)(iii) and CR 406(3)(d)(iii) takes effect from 1 January 2022. Section 4.4 of the Guide covers this information in greater detail. 3A-9