SECTION 3: NOMINATION AND APPOINTMENT PROCESS

Section 3: Nomination and Appointment Process | 67 Q: (a) Is the Board composition adequate to address the requirements as stipulated in the Listing Rules and Code? (b) Do these Board members, collectively, possess an appropriate balance and diversity of skills, experience, gender and knowledge of the company? (c) Should there be any concern about the time some members can commit to Company ABC since they hold multiple directorships? A: (a) Board composition Member A is the Chairman of the Board and he is an ID. Therefore, the Company is only required to meet the threshold of at least one third of the Board to comprise IDs 50 . Company ABC has two IDs out of six board members. However, the Board composition of the Company may not satisfy Provision 2.3 of the Code, which stipulates that NEDs should make up a majority of the Board. Currently, the Company has three NEDs (including Member C who has a business relationship with the Company) out of six Board members. The NEDs only make up half of the Board, which is not a majority. In this case, Company ABC is required to have at least one more NED/ID (or alternatively to have one of the EDs step down from the Board) in order to satisfy Provision 2.4. While there is a need to meet the requirements of the listing rules and the Code, the Board can also revisit the number of EDs and consider inviting executives to meetings as and when necessary, instead of appointing them as Board members. This will ensure an appropriate balance of EDs and NEDs, as well as avoid having a Board so large that it becomes unwieldly, leading to ineffective discussion, decision-making and higher costs for the Company. 50 MR 210(5)(c) and CR 406(3)(c). Effective 1 January 2022.