The Nine-Year Rule
The revised Code of Corporate Governance obliquely implies that time on a Board could affect a director , but continuity has its advantages, says DAVID CONNER
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ONE of the new provisions in the revised Code of Corporate Governance released in May 2012 is the so called "Nine Year Rule". This has engendered much discussion and could potentially result in significant movements within the boardrooms of corporate Singapore.
Guideline 2.4 of the Code states that "the independence of any director who has served beyond nine years from the date of his first appointment should be subject to particularly rigorous review. In doing so, the Board should also take into account the need for progressive refreshing of the Board. The Board should also explain why any such director should be considered independent."
This apparent link between a director's tenure of service and his independence deserves closer examination.
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