In a recent Viewpoint issue titled “All trained up with no place to go: The challenges aspiring directors face?” published by the Centre for Investor Protection at NUS Business School, I presented findings from research on the appointment of independent directors (IDs) to Singapore Exchange (SGX) listed issuers from 1st January 2021 through 31st July 2026. Over this period, there were 1,708 ID appointments.
On 25th August, The Business Times published an article based on that report, titled “The reality check awaiting Singapore’s aspiring board directors”. It looked at trends in ID appointments over that period, monthly patterns, the breakdown between first-time directors and experienced directors, and age profile of IDs who were appointed.
Directors are designated “first time” if they have not previously served as an ID in any listed issuer, and “experienced” otherwise. Only ID appointments are included as most aspiring directors are looking to be appointed as IDs.
The main message is that there are not many new ID appointments each year and there is a preference for directors who have prior experience serving on listed boards, making board opportunities even more scarce for aspiring directors. Many aspiring directors, paying substantial sums to complete multiple programmes, may find that the return on their investment is zero, if they signed up for these programmes hoping for board seats in listed issuers here.
While some aspiring directors may not be “board ready” even if they have completed multiple programmes, I have also come across some aspiring directors who I feel are “board ready” but the door to a listed board remains closed. They may be able to improve the quality of listed boards because they are better qualified than many so-called experienced directors. While aspiring directors who have done many programmes may not be “board ready”, experienced directors are not necessarily “board fit”.
In my conversations with some aspiring directors, I often encourage them to also look for opportunities overseas, such as in Malaysian listed companies or financial institutions. Having been teaching or taught mandatory programmes for first-time directors of listed companies and financial institutions there for many years (which are for those who have actually been appointed to a board), there appears to be more board opportunities for aspiring directors there. While most are Malaysians, I have also met a good number of Singaporeans in these programmes.
Which brings me to an aspect of diversity that is lacking which we do not talk much about – geographical diversity.
Based on the ID appointments in SGX-listed issuers over the period of the study, they are overwhelmingly dominated by Singapore-resident directors.
Singapore-resident directors accounted for 1,325 ID appointments (84.7%). Malaysia is a distant second, at just 53 appointments (3.4%), followed by Hong Kong (42, 2.7%), and China (39, 2.5%). Others among the top 10 countries are Thailand, US, Indonesia, Australia, UK and India, each with 18 or fewer ID appointments.
Singaporean listed issuers may benefit from better geographical diversity among IDs, especially if their major markets extend beyond Singapore. While some current IDs may have international experience, IDs who are resident overseas may have deeper current market knowledge. Geographical diversity may also bring other forms of diversity, such as ethnic and cultural diversity. Foreign directors may also be less bound by local norms and preserving relationships, making them more willing to express different views. Of course, issuers should not be appointing foreign directors just to window dress their boards. Many years ago, a foreign executive who was approached to join a board as an ID asked me if he may be stepping on any big toes on the board. I told him that he was already not independent – so foreign directors do not necessarily mean directors who are more willing to speak up.
Listed issuers in other countries can likewise benefit from such diversity. For example, it may be beneficial for both Singaporean and Malaysian listed issuers to appoint more IDs from the opposite end of the Causeway.
There is no reason to just source IDs from the local market when there may be better candidates from the region and an opportunity to further improve diversity in perspectives.
