Time commitment of independent directors
Several participants expressed concern over the requirement for the Nominating Committee to include guidance on the time commitment expected of individual directors, specifically Independent Non-Executive Directors (INEDs). Participants considered whether existing practices are adequate, since the Guidelines offered little to go on by way of an appropriate starting point. Some participants were concerned not to set the bar too high compared to their counterparts in the industry.
In addition to possibly resulting in a “box-ticking” exercise that prioritises objectively verifiable measurements of commitment such as days spent in the office and meetings attended, one participant expressed concern that the setting of quantitative targets threatened to blur the boundary between executive directors and NEDs. For instance, if a NED found himself unable to achieve the requisite level of time commitment in the exercise of his duties, would he be tempted to run the risk of becoming involved in matters that more properly fall within the purview of executive directors.
Limitation on number of directorships
The requirement for the Nominating Committee to provide guidance on the number of directorships that a board member should be able to hold was generally felt to be an unnecessary restriction. One participant saw this as something more properly decided by the relevant director himself and that such limitations might actually serve to lower governance standards within the jurisdiction by reducing the (inherently limited) pool of suitably qualified candidates.
Deemed loss of independence
Under the Guidelines, a director is deemed to have lost his ‘independence’ automatically after 9 continuous years’ service. The presumption is not rebuttable.
One participant illustrated the potential difficulty that this requirement may give rise to with the example of and independent director in the midst of a project during which term he crosses the nine-year threshold. MAS’ rejection of a rebuttable presumption approach during the consultation feedback may in fact make succession planning more challenging.