Companies Act must be amended now to ensure real independence of directors

I REFER to the BT article "SGX to inspect over 550 listed firms on governance code" (Oct 13).

This is a matter of great concern as there was a report in December 2014 that said some Singapore-listed companies might miss the 2017 deadline to attain complete board of director independence.

If this fundamental independence requirement can be breached, we can say that any hope of full compliance with the Code of Corporate Governance by all public listed companies will remain a dream unless the Singapore Exchange takes firm enforcement action.

Many Central Provident Fund members invest their retirement funds in the stock market. Their interests and those of the investing public must be protected at all cost. There should be no compromise whatsoever on compliance with the requirement for full independence of directors.

If companies are allowed to get away with this, the lax attitude towards control at the top would flow down to affect all levels of the public listed company concerned.

We must not have yes-man directors in public listed companies for them to ignore the need for the independence of directors.

All directors owe a fiduciary responsibility to the investing public as custodians of their trust.

The majority shares of some public listed companies are owned by an individual or family, who may want to run the firm like their fiefdom. SGX should identify these companies to ensure absolute compliance with board independence immediately.

Some top executives sit in for the full length of regular scheduled committee meetings of independent directors. They often breathe down the necks of the other directors during these meetings, thus ignoring and disrespecting the spirit of independence.

It must be made compulsory by law not to allow top executives to be present at the full regular committee meetings of independent directors. Unless invited for a short duration on some issues under deliberation at the meeting, no top executive should be present at committee meetings of independent directors to restrict their freedom to carry out their duties effectively and independently, free of fear, favour or control.

The Companies Act must be amended now and not after 2017 to make it compulsory for the directors to take collective responsibility in disclosing in annual reports to shareholders that there is real independence in committee meetings of independent directors.

The authorities must prosecute those directors who contravene this law.

Tan Kok Tim Singapore