Board Matters
1. Board Roles and Director Duties
Board’s Role
The Board’s role is to:
- provide entrepreneurial leadership, and set strategic objectives, which should include appropriate focus on value creation, innovation and sustainability;
2. Board Composition and Guidance
Director Independence
There should be a strong and independent element on the Board.
An independent director (ID) should have no relationship (whether familial, business, financial, employment, or otherwise) with the company, its related corporations, substantial shareholders or officers, which could interfere or be perceived to interfere with the director’s independent judgment.
3. Chairman and Chief Executive Officer
The separation of the role of the Chairman of the Board (Chairman) from that of the Chief Executive Officer (CEO) avoids concentration of power in one individual, and ensures a degree of checks and balances. Where the Nominating Committee determines that the Chairman and CEO share close family ties, the Chairman is not independent.
4. Board Membership
The process for the selection, appointment and re-appointment of directors should take into consideration the composition and progressive renewal of the Board, as well as each director's competencies, commitment, contribution and performance
Remuneration Matters
6. Procedures for Developing Remuneration Policies
There should be written terms of reference which clearly spell out authority and duties of the Remuneration Committee (RC). The Board should disclose in the company's annual report the names of the members of the RC and the key terms of reference of the RC, explaining its role and the authority delegated to it by the Board.
7. Level and Mix of Remuneration
A company’s remuneration framework should be tailored to the specific role and circumstances of each director and key management personnel (KMP). This ensures an appropriate remuneration level and mix that recognises the performance, potential and responsibilities of these individuals.
8. Disclosure on Remuneration
A company’s annual remuneration report should form part of, or be annexed to, the company’s annual report. It should be the main means through which the company reports to shareholders on all forms of remuneration and other payments and benefits, for directors and key management personnel (KMP), from itself and its subsidiaries.
Accountability and Audit
9. Risk Management and Internal Controls
The Board is responsible for the governance of risk, including determining the nature and extent of the significant risks which the company is willing to take.
10. Audit Committee
There should be written terms of reference which clearly spell out the authority and duties of the Audit Committee. The Board should disclose in the company's annual report the names of the members of the AC and the key terms of reference of the AC, explaining its role and the authority delegated to it by the Board.
Shareholder Rights and Engagement
11. Shareholder Rights and Engagement
While companies are required to meet the minimum notice period for general meetings, companies should consider providing longer notice for meetings, especially when dealing with complex transactions, or where the company has numerous overseas shareholders.
Managing Stakeholders Relationships
13. Engagement with Stakeholders
In the execution of its duties, the Board should not only consider the company’s obligations to its shareholders but also the interests of its material stakeholders. The relationships with material stakeholders may have an impact on the company’s long-term sustainability.