SINGAPORE - Overboarding – the practice of individuals holding more board directorships than they can reasonably handle – is not prevalent in Singapore.
Senior Minister of State for Finance Chee Hong Tat said on Tuesday that about 95 per cent of directors hold no more than two directorships, and over 80 per cent hold only one directorship, on the boards of Singapore-listed companies.
He was responding in Parliament to a question from Mr Leon Perera (Aljunied GRC) on whether there are existing regulations to ensure individuals do not hold too many board directorships and, if not, whether the Government would examine introducing such regulations.
Mr Perera had argued that the more board directorships one holds, the less time one can devote to discharging his responsibilities as a director effectively.
Mr Chee said the Companies Act does not limit the number of directorships that an individual may hold in Singapore-incorporated companies.
But all directors are required to discharge their duties responsibly, with honesty and with reasonable diligence, he added.
They will face enforcement action, including disqualification and debarment, if they fail to do so.
A debarred individual cannot take on a new appointment as director of any other company.
Mr Chee said the Code of Corporate Governance has additional safeguards if a director holds a significant number of directorships.
In this instance, the company’s nominating committee and board have to provide a reasoned assessment of the ability of the director to discharge his or her duties diligently.
In addition, Singapore-listed firms have to meet other requirements under the Singapore Exchange’s (SGX) listing rules, Mr Chee said.
SGX rules stipulate that companies have to disclose the directorships and principal commitments of individuals seeking to be appointed or re-elected to their boards.
In January, SGX also amended its listing rules to limit the tenure of independent directors to nine years, beyond which these directors will no longer be considered independent.
Listed companies will also have to disclose in their annual reports the exact amount and the breakdown of the remuneration paid to their directors and chief executive officers.
SGX said these measures will promote good corporate governance and greater diversity in the boardroom, thereby strengthening the boards’ decision-making process.
