A. Explanation

This Provision emphasises the competency and developmental needs of directors.

There are two facets of the competencies needed of a director:

• Understanding the business
• Understanding their roles, functions and responsibilities as a director

First-time directors, especially, require an understanding and appreciation that their role is different from the role they may have previously held, such as a member of senior management. MR 210(5)(a) and CR 406(3)(a) requires a director who has no prior experience as a director of an issuer listed on the Exchange to undergo training in the roles and responsibility of a director of a listed issuer as prescribed by the Exchange.

A newly-appointed director (whether first-time or experienced) needs to understand the company’s business and operations. He should receive this training through an induction programme organised by the company.

However, beyond their initial training, first-time and new directors need to maintain their skills and knowledge. In many respects, being a director is a profession, and one that is increasingly demanding.

The emphasis on continuing training recognises the evolving demands on directors in an ever-changing and demanding business and regulatory environment. These changes require companies to be flexible and to adapt their strategies and responses. Correspondingly, Boards and directors need to be well-equipped to help drive the business direction, and to ensure that the company conforms with changing regulations.

The developmental needs of directors should be guided by a proactive Board training programme whose costs are to be borne by the company. In this regard, the Practice Guidance suggests that the Board should develop an appropriate policy and criteria for the development of its directors. The Board Chairman and the NC Chairman should jointly and regularly review and agree with each director his training and professional development needs.

The Provision calls for disclosure of the different forms of training and development provided to all directors, whether they are new or existing.

B. Practice Guidance

• Practice Guidance 1: Board Roles and Director Duties.

C. Related Rules and Regulations

• MR 210(5)(a) and CR 406(3)(a): Directors and Management.
• MR 720(1) and CR 720(1): Directors and Management.
• MR Appendix 7.4.1 and CR Appendix 7F: Announcement of Appointment.

D. CG Guides

• NC Guide 5.1: Introduction [Professional Development].
• NC Guide 5.2: Importance of Training for Directors [Professional Development].
• NC Guide 5.3: Professional Development Policy [Professional Development].
• NC Guide 5.4: Types of Professional Development [Professional Development].
• NC Guide 5.5: Professional Development Implementation [Professional Development].
• NC Guide Appendix 5B-1: Training Requests by Directors [Professional Development].
• NC Guide Appendix 5C: SID Continuing Professional Development Policy [Professional Development].
• NC Guide Appendix 5D: SID Professional Development Curriculum [Professional Development].

E. Related Articles

• “Back to basics: financial literacy for Board members” by Barbara Voskamp. (446KB)
• “Your first Board meeting” by Michael Gray. (48KB)
• “Cutting it as a director” by Benedict Lim. (46KB)
• “So, you want to be a startup director?” by Poh Mui Hoon. (223KB)
• “Expanding horizons: Learning, unlearning and relearning in the future economy” by Poh Mui Hoon. (5.5MB)
• “Going the distance in director development” by Koh Wei Chern. (117KB)