Source of article: THE BUSSINESS TIMES

My post on LinkedIn can be seen here.

In summary:

I can think of no better incentive to motivate directors to be on the ball than the deterrence of being publicly named and shamed in civil law suits or criminal enforcement actions. The consequences of being criminally charged by enforcement authorities or sued in court for being an ignorant or negligent director can be fatal.

The law imposes statutory and fiduciary duties equally on both executive and non-executive directors.

It is not unusual for the management of listed companies to provide non-executive directors with only the bare-bones information on matters requiring formal board approvals. I have previously encountered such situations as an independent director.

To avoid being “a sleep-walking director” faced with criminal charges or negligence suits for not being vigilant, non-executive directors must do their utmost to uncover all information necessary for each of them to make an informed decision or judgement.

Before being reasonably satisfied with the information provided by management, no director should sign on any document or board resolution that is presented to the Board, even when under pressure by management.   

A director’s right to inspect the accounting and other records of a company is absolute, unlimited and unqualified, so long as the object of having access is to enable him to discharge his duties as a director, and not for any collateral purpose.

Having more rules and regulations to compel directors to attend periodic training courses is not the panacea to raising the standards of good corporate governance for companies. All directors should take it upon themselves to be continuously well informed of their legal and regulatory obligations.

As there is only so much time and bandwidth that a director can devote to the affairs of a company, no person should accept non-executive directorships in more than 3 to 4 public-listed companies at any time.  

I thank Navene Elangovan of the Singapore Business Times for publishing my views in the attached commentary on 19 February 2024.

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