SECTION 3: NOMINATION AND APPOINTMENT PROCESS

Section 3: Nomination and Appointment Process | 57 • Periodic review of directors’ independence status . The continued appointment of independent directors who have served on the Board for an aggregate period of more than nine years requires approval in separate resolutions by (A) all shareholders; and (B) shareholders, excluding the directors and chief executive officer (CEO), as well as their associates 37 . It is important to avoid a situation where a long-serving director is unable to offer constructive challenge because he has grown too familiar with the job or he has become too close to management. (Please refer to Section 4 of this Guide for further details on the assessment process.) • Establishment of a succession plan . Periodic assessments of directors may reveal the lack of certain important capabilities. Periodic reappointment can be an opportunity to refresh the Board with new directors who have those capabilities. Having a structured approach to directors’ succession planning is important especially when the majority of the directors are approaching the limits of their terms. The NC should identify prospective successors and allow them sufficient time to equip themselves with the necessary experience, skills and knowledge. This will help ensure a smooth transition for the Board. (Please refer to Section 7 of this Guide for details on succession planning for the Board Chairman and directors.) 3.9.3 At least once a year, the NC should recommend to the Board whether existing Board members should be reappointed or if new members should be brought into the Board. The nomination and reappointment process is effected by the shareholders in an AGM as discussed in Section 3.8 of this Guide. 3.9.4 The Code requires a description of the process for the reappointment of directors to the Board to be included in the annual report 38 . An additional disclosure should be made if the reappointment also involves an ID who has served on the Board for more than nine years from the date of his first appointment 37 MR 210(5)(d)(iii) and CR 406(3)(d)(iii). Effective 1 January 2022. 38 Provision 4.4 of the Code.