Provision 3.3 of the Singapore Code of Corporate Governance 2018 states: “The Board has a lead independent director to provide leadership in situations where the Chairman is conflicted, and especially when the Chairman is not independent. The lead independent director is available to shareholders where they have concerns and for which contact through the normal channels of communication with the Chairman or Management are inappropriate or inadequate”.

It is clear that the Chairman should not be the lead independent director because the lead independent director is meant to be an additional check and balance in situations where the Chairman is conflicted (such as performance assessment or succession planning for the Chairman). It is especially appropriate when the Chairman is not independent because in such situations, there is a lack of independent leadership on the board.

I have always viewed a lead independent director as more as a necessary evil to compensate for less than satisfactory corporate governance where a company does not have an independent Chairman. While I believe it is important to have adequate segregation of responsibilities and avoid an over-concentration of powers in one person, I also believe that having a lead independent director where there is already an independent Chairman may lead to too many “chiefs” in the company. Corporate governance is not about just having more controls or safeguards, and more may actually be less in some situations. In some cases, a lead independent director may be more of an excuse to pay additional fees to an independent director, rather than truly enhancing the corporate governance of a company.

Which brings me to the bewildering situation of some companies making the “independent” Chairman the lead independent director. This amounts to appointing someone to provide a check and balance on himself – or what in Singapore we call “ownself check ownself”. One example of a company doing so is KTL Global, a company mired in controversy after controversy (with allegations of cheating, false trading and potential fraud involving former CEOs/senior management);  is struggling to get out of the SGX Watchlist (and more than halfway through its cure period); received numerous queries from SGX; has now seen its shares “voluntarily” suspended; is having difficulties holding its AGM (with multiple extensions being sought from and granted by regulators); and received a disclaimer of opinion from its auditors for its financial statements for the year ended 31 December 2020.

KTL Global has an independent Chairman, Chng Hee Kok, who according to KTL Global’s website serves on seven other boards, including being independent Chairman of one of these other boards. He has previously served on many other boards. The six-member board of KTL Global has four other independent directors and an executive director/CEO. Apart from one of the other independent directors, the other three independent directors all have experience serving as directors of listed companies. One is a Chairman and executive director of another SGX-listed company. Another serves as an independent director on two other SGX-listed companies. The third is a lawyer who serves as lead independent director on two other SGX-listed companies and acts as company secretary for two companies listed on SEHK and/or SGX. He is said to frequently advise listed companies on their regulatory compliance and corporate governance matters.

With all these experienced directors on the board, including one who also advises listed companies on regulatory compliance and corporate governance matters,  it is surprising that they do not appear to understand the role of a lead independent director and that it does not make sense to appoint the Chairman as the lead independent director.

KTL Global is not the only SGX-listed company to appoint the independent Chairman as lead independent director. On 13 July 2021, Darco Water Technologies announced the appointment of its independent Chairman who was also to be the lead independent director. After I commented on LinkedIn that this does not make sense, the company issued a clarification the next day that the independent Chairman would be “re-designated” from Lead Independent Director to Independent Non-Executive Chairman.

I have not looked at whether there are other companies which have appointed the Chairman as the lead independent director. It would not surprise me if there are, as many companies approach the Code without fully understanding its intent, even when it is clearly spelled out like in this case. However, most directors seem to believe that corporate governance is one of their competencies, judging by companies that disclose the competencies of their directors. Perhaps we will see the same thing when it comes to understanding climate issues. Just because they can tell the difference between whether it is sunny or raining, directors may believe they have competencies in climate issues.