More enforcement action needed against negligent IDs, not less

I REFER to the letter "Companies should do more to protect IDs' independence" (BT, March 9).

The writer was concerned that the recent arrest of the directors at Raffles Education Corporation may affect the availability of independent directors (IDs) to protect the interests of minority shareholders. He felt it may make retirees less willing to be IDs, resulting in a dearth, and minority shareholders will be losers as a consequence. He also proposed that the Companies Act be amended to "ensure real independence of directors", by imposing more stringent requirements on the executive chairman and/or chief executive officer to keep the board informed of material information.

IDs first and foremost owe duties to the company, although they also have an important role in protecting minority shareholders, Unfortunately, judging by what has happened in many companies here, minority shareholders may actually need protection from IDs. We have seen IDs approving questionable acquisitions with little due diligence, endorsing the withholding of material information that should be disclosed, allowing funds to be dissipated without security or safeguards, and so on. This has resulted in a big loss of confidence in our market.