Rebuilding trust in independent directors
Minority shareholders should have greater say in appointing IDs and the independence criteria should be more prescriptive.
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THE concept of independent directors (IDs) was formally introduced to corporate Singapore in the first Code of Corporate Governance in April 2001, which was largely modelled on the then 1998 UK Combined Code.
Each revision of the Code has since seen some adjustments to the criteria for determining director independence. In the last review, employment and family relationships used to determine independence were moved to the listing rules, making them binding. Those relating to business and shareholding relationships are now in the practice guidance and no longer subject to "comply or explain" - although the disclosure of such relationships is still expected.
The proportion of IDs increased from one-third in the 2001 Code, to half IDs where the chairman is not independent in the 2012 Code, and then to a majority IDs where the chairman is not independent in the latest Code.
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