How might the Code be tweaked the next time?

THE Singapore Code of Corporate Governance (SCCG) last month underwent its third revamp since it was first introduced in 2002. Throughout the past 16 years, these revamps have been aimed at adapting the Code to suit changing circumstances and to fit the best practices in other developed markets.

The latest revisions focused on enhancing the quality of the Board of Directors - through a tighter definition of independence and through the setting of a hard limit of service for directors at nine years.

To see how the Code has evolved, it is worth recalling that a proposal in 2005 to tighten the definition of independence from substantial shareholders was not accepted.

The reason given was that the "critical feature for directors to be able to exercise their duties effectively is independence of mind and independence from management, rather than independence from substantial shareholding per se. Substantial shareholders do not pose the kind of principal-agent problems that executive directors can potentially pose, and to equate them by treating both as non-independent …