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<TABLE border=0 cellSpacing=0 cellPadding=0 width=452><TBODY><TR><TD vAlign=top width=452 colSpan=2>Published April 13, 2010
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>SID should spell out where it's coming from
By WONG WEI KONG
WHILE the ongoing debate over multiple directorships here has been engaging in itself, it has also put the Singapore Institute of Directors (SID) in sharp focus. Not a surprise, certainly, because it is only to be expected that the SID would take a public stand on an issue that is directly related to its members.
It does, however, lead to several pertinent questions. What, really, does the SID stand for? Is it a lobby group in the sense that it represents first and foremost the interests of company directors? Is it also an advocate of good corporate governance? If so, can it equally perform both roles? These are questions worth asking because they frame the context in which the SID's representations on corporate and policy issues should be viewed.
The issue at hand - the debate on multiple directorships - was reignited recently when Singapore Exchange chairman JY Pillay said his personal view is that an individual should sit on the boards of not more than five large, diverse companies.
The debate has seen some come out strongly in favour of a qualitative guideline suggesting an upper limit to the number of directorships. Securities Investors Association of Singapore (Sias) chief David Gerald called for a cap of four directorships for those with a full-time job and six for those without. But the SID has argued steadfastly that a limit is unnecessary as a director knows his or her own limitations, and that it is best left to the individual and the company to decide.
Now, the question ringing in the heads of the more cynical is this: does the SID's stand stem from the fact that it is a grouping of directors, or is it arguing based on a well-established corporate governance principle?
To put things into perspective, proposing a cap or guidelines on directorships isn't a wild shot in the dark. For instance, in the US, the National Association of Corporate Directors (NACD) recommended that directors with full-time positions should not serve on more than three or four other boards while the Council of Institutional Investors suggested that directors with a full-time job should not sit on more than two other boards. The UK Combined Code suggested that an executive director of a company should not sit on more than one other board of another large listed (FTSE 100) company. So the idea of some limits on directorships, notwithstanding the variations, is an established corporate governance principle in key markets, markets from which Singapore often takes the cue in terms of corporate governance and accounting principles.
So the SID's stand, it can be said, is against the grain considering the positions taken in the markets where corporate governance principles are most developed. It has been pointed out too that 50 directors sit on the boards of six or more listed companies in Singapore, or less than 1.3 per cent of the total of 3,869 directors. The logical response, one may argue, is to have a guideline to nudge this small minority in the right direction. And given the vast majority who are already in compliance, this wouldn't present a major issue too.
Yet, the SID still says 'no', and this leaves it open to criticism of self-interest - that it may be putting the interest of directors first before corporate governance principles. In fairness, the opposite could just be as true - the SID's position could be based firmly on how it feels good corporate governance should be advanced in the Singapore context. Unfortunately, it is not lost on its critics that one member of the SID's governing council holds 8 directorships in listed firms with several others holding 5 directorships each - a notable statistic given that less than 4 per cent of all directors in Singapore hold four or more listed directorships.
It must be said that it will not be wrong for the SID to promote the interests of directors, or to act as a lobby group on behalf of its members. That, in fact, will be what its members rightly expect in return for paying their dues. The problem comes with the ambiguity of what it purports to do. On its website, the SID laid down its mission - 'To promote the professional development of directors and corporate leaders and encourage the highest standards of corporate governance and ethical conduct'. Letting directors decide for themselves how many directorships they should take may be in line with their 'professional development' but may not, as many will argue, sit so well with 'the highest standards' of corporate governance. So is the SID speaking on the behalf of directors' interests or good corporate governance in the debate or struggling to reconcile both objectives? It is hard to tell.
In contrast, the UK Institute of Directors makes no bones about what it represents. Created by Royal Charter in 1906, the IOD calls itself the directors' representative in business. 'As an independent association of individual company directors, our objective is to make sure your views are taken into account when the government is reviewing policy; legislating or simply seeking views of the wider business community,' it states on its website. Like the SID, the IOD regularly gives its views on policy issues, but there is no confusion over what it stands for.
That's how it should be. When Sias speaks, it's clear that it represents minority investors. Likewise, the Investment Management Association of Singapore (Imas) which represents fund managers, the Society of Remisiers (SOR) for remisiers and the Securities Association of Singapore (SAS) for securities players. When they engage, they are arguing from clearly stated positions. It will be healthy too if the SID removes some of the ambiguity of what it stands for - there is nothing negative about being a lobby group for directors. More voices do make for a better debate, but it is even more important to know where they are coming from.<SCRIPT language=javascript> <!-- // Check for Mac. var strAgent; var blnMac; strAgent = navigator.userAgent; strAgent.indexOf('Mac') > 0 ? blnMac = true:blnMac = false; if (blnMac == true) { document.write('
'); } //--> </SCRIPT>
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</TD></TR><TR><TD vAlign=top width=452 colSpan=2>SID should spell out where it's coming from
By WONG WEI KONG
WHILE the ongoing debate over multiple directorships here has been engaging in itself, it has also put the Singapore Institute of Directors (SID) in sharp focus. Not a surprise, certainly, because it is only to be expected that the SID would take a public stand on an issue that is directly related to its members.
It does, however, lead to several pertinent questions. What, really, does the SID stand for? Is it a lobby group in the sense that it represents first and foremost the interests of company directors? Is it also an advocate of good corporate governance? If so, can it equally perform both roles? These are questions worth asking because they frame the context in which the SID's representations on corporate and policy issues should be viewed.
The issue at hand - the debate on multiple directorships - was reignited recently when Singapore Exchange chairman JY Pillay said his personal view is that an individual should sit on the boards of not more than five large, diverse companies.
The debate has seen some come out strongly in favour of a qualitative guideline suggesting an upper limit to the number of directorships. Securities Investors Association of Singapore (Sias) chief David Gerald called for a cap of four directorships for those with a full-time job and six for those without. But the SID has argued steadfastly that a limit is unnecessary as a director knows his or her own limitations, and that it is best left to the individual and the company to decide.
Now, the question ringing in the heads of the more cynical is this: does the SID's stand stem from the fact that it is a grouping of directors, or is it arguing based on a well-established corporate governance principle?
To put things into perspective, proposing a cap or guidelines on directorships isn't a wild shot in the dark. For instance, in the US, the National Association of Corporate Directors (NACD) recommended that directors with full-time positions should not serve on more than three or four other boards while the Council of Institutional Investors suggested that directors with a full-time job should not sit on more than two other boards. The UK Combined Code suggested that an executive director of a company should not sit on more than one other board of another large listed (FTSE 100) company. So the idea of some limits on directorships, notwithstanding the variations, is an established corporate governance principle in key markets, markets from which Singapore often takes the cue in terms of corporate governance and accounting principles.
So the SID's stand, it can be said, is against the grain considering the positions taken in the markets where corporate governance principles are most developed. It has been pointed out too that 50 directors sit on the boards of six or more listed companies in Singapore, or less than 1.3 per cent of the total of 3,869 directors. The logical response, one may argue, is to have a guideline to nudge this small minority in the right direction. And given the vast majority who are already in compliance, this wouldn't present a major issue too.
Yet, the SID still says 'no', and this leaves it open to criticism of self-interest - that it may be putting the interest of directors first before corporate governance principles. In fairness, the opposite could just be as true - the SID's position could be based firmly on how it feels good corporate governance should be advanced in the Singapore context. Unfortunately, it is not lost on its critics that one member of the SID's governing council holds 8 directorships in listed firms with several others holding 5 directorships each - a notable statistic given that less than 4 per cent of all directors in Singapore hold four or more listed directorships.
It must be said that it will not be wrong for the SID to promote the interests of directors, or to act as a lobby group on behalf of its members. That, in fact, will be what its members rightly expect in return for paying their dues. The problem comes with the ambiguity of what it purports to do. On its website, the SID laid down its mission - 'To promote the professional development of directors and corporate leaders and encourage the highest standards of corporate governance and ethical conduct'. Letting directors decide for themselves how many directorships they should take may be in line with their 'professional development' but may not, as many will argue, sit so well with 'the highest standards' of corporate governance. So is the SID speaking on the behalf of directors' interests or good corporate governance in the debate or struggling to reconcile both objectives? It is hard to tell.
In contrast, the UK Institute of Directors makes no bones about what it represents. Created by Royal Charter in 1906, the IOD calls itself the directors' representative in business. 'As an independent association of individual company directors, our objective is to make sure your views are taken into account when the government is reviewing policy; legislating or simply seeking views of the wider business community,' it states on its website. Like the SID, the IOD regularly gives its views on policy issues, but there is no confusion over what it stands for.
That's how it should be. When Sias speaks, it's clear that it represents minority investors. Likewise, the Investment Management Association of Singapore (Imas) which represents fund managers, the Society of Remisiers (SOR) for remisiers and the Securities Association of Singapore (SAS) for securities players. When they engage, they are arguing from clearly stated positions. It will be healthy too if the SID removes some of the ambiguity of what it stands for - there is nothing negative about being a lobby group for directors. More voices do make for a better debate, but it is even more important to know where they are coming from.<SCRIPT language=javascript> <!-- // Check for Mac. var strAgent; var blnMac; strAgent = navigator.userAgent; strAgent.indexOf('Mac') > 0 ? blnMac = true:blnMac = false; if (blnMac == true) { document.write('
'); } //--> </SCRIPT>
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