| There is a clear division of responsibilities between the leadership of the Board and Management, and no one individual has unfettered powers of decision-making. |
Singapore adopts a one-tier model of Board governance in which the Board has oversight responsibilities, while management is responsible for the day-to-day operations of the company. However, as the Board can comprise both Executive Directors (EDs) and Non-Executive Directors (NEDs), this presents a risk of management exerting undue influence over the Board’s processes and decisions.
For this reason, this Principle sets out the importance of clearly distinguishing between the roles of the Board and management, and to avoid concentrating power in the hands of an individual on the Board.
To achieve this, the Provisions describe:
- The separation of the positions and roles of the Board Chairman and Chief Executive Officer (CEO) (Provision 3.1).
- The need to set out the division of responsibilities between the Chairman and the CEO (Provision 3.2).
- The need for a Lead Independent Director (Lead ID) to provide leadership in situations where the Chairman is conflicted (Provision 3.3).
Provision 3.1
The Chairman and the Chief Executive Officer (“CEO”) are separate persons to ensure an appropriate balance of power, increased accountability, and greater capacity of the Board for independent decision making9.
Provision 3.2
The Board establishes and sets out in writing the division of responsibilities between the Chairman and the CEO.
Provision 3.3
The Board has a lead independent director to provide leadership in situations where the Chairman is conflicted, and especially when the Chairman is not independent. The lead independent director is available to shareholders where they have concerns and for which contact through the normal channels of communication with the Chairman or management are inappropriate or inadequate.