Five years have passed since the concept of director independence was first mooted, but it remained a hotly debated topic at the launch of the Singapore Board of Directors (BOD) Survey 2017 yesterday.
What is clear is the need to separate control from ownership in listed companies for an effective board. Shareholders need to know that board members are acting in their best interests.
What is still debatable, however, is the threshold level that should be adopted to identify substantial shareholdings under the Companies Act and the Securities and Futures Act.
That figure is now 10 per cent. It was raised from 5 per cent in 2012 by the Monetary Authority of Singapore (MAS) in response to recommendations by the Corporate Governance Council.
With rival Stock Exchange of Hong Kong (HKEX) looking to gravitate towards a stringent definition of independence as a shareholder who does not hold more than a 1 per cent interest in the company, Singapore's threshold of 10 per cent interest may have to be re-examined.
Ms June Sim, senior vice-president and head of listing compliance at the Singapore Exchange (SGX), said at a panel discussion: "SGX is not very stringent because in Singapore we started with 10 per cent with an early warning by MAS that this 10 per cent must be reviewed over time and I think with HKEX gravitating to 1 per cent, clearly I don't think that requirement should be dropped anywhere, whether in the code or listing rules."
Mr Tan Boon Gin, chief executive of SGX RegCo, said that under the Companies Act, a shareholder with 10 per cent interest can demand a general meeting of the company.
On whether there should be a cap on the number of directorships that a director can hold, Ms Sim said Singapore, like Britain, does not impose a cap, though "six" appears to be the most common limit set by survey respondents.
The biennial Singapore BOD Survey 2017 - which polled a record 203 respondents between May and July - found that the level of non-compliance with the Code of Corporate Governance remains high.
It found that 30 per cent of respondents do not impose hard restrictions on the years an independent director can serve nor conduct rigorous review after nine years.
The 10th edition, which is jointly launched by Singapore Institute of Directors (SID), the SGX, PricewaterhouseCoopers (PwC) and Singapore University of Social Sciences (SUSS), also revealed an uptick in the percentage of respondents taking steps to encourage more female representation on the board - 39 per cent for 2017 compared with 14 per cent for the 2015 survey.
However, while 71 per cent indicated they encouraged females on their boards, most had no specific plans on how they intend to do so.
The main challenge - the lack of suitable female candidates and the lack of an adequate pool of female candidates.
Mr Jon Robinson, managing director of Robinson Consulting, said the importance of remuneration disclosures in protecting shareholder interests cannot be overemphasised.
More than half of the survey respondents do not disclose detailed remuneration of each director and CEO on a named basis, citing confidential and poaching concerns.
"This needs to be disclosed because shareholders want to know that the board is not enriching themselves at the expense of the company. Also, they need to know why and what they are paying the directors for," Mr Robinson said.
SGX's Mr Tan said the regulator has taken steps to engage recalcitrant parties.