In light of the proposal by the CGAC to introduce a limit of five directorships in listed issuers (including directorships in foreign listed companies and managers of trusts), I thought I would reshare this article I published in Business Times back in 2009.
I argued for six listed company directorships – and four for those with full-time jobs – at that time. I did not want to push too hard. But I think five is about right for someone without a full-time job and two for those with – including those who are EDs of listed companies, partners in law firms, etc.
My position on this has seen me engaged in public exchanges with the Singapore Institute of Directors, after I retired from the governing council which at that time had several busy directors. In fact, when I was on the council, Business Times published a report quoting me and naming some of the busy directors, and a few were on the council with me – imagine the awkwardness when I attended the next council meeting.
SID’s position was that there were not enough qualified directors, which I disputed. They may not take the same position now that there are many aspiring directors who have been trained, including by them. But I would also caution that simply obtaining a certification or accreditation does not necessarily make a person suitable or ready to be a director. However, I do believe there are many out there who have not served on a listed board yet who would make better directors than a good number of current directors on listed boards (although the bar may not be that high) – because I have met many of those in both categories or seen them in action.
In September this year, I gave a keynote at the ID forum organised by the Vietnam Independent Directors Association (VNIDA) in Ho Chi Minh City, on the evolving role of IDs in modern boards. One of the things I said was that given the role of IDs today being much more than just a gatekeeper, but also (a) a steward expected to oversee culture, strategy, risk, sustainability, succession, capital allocation and performance; ensure governance works in substance and the company is creating long-term value for shareholders and stakeholders; and (b) an anticipator who needs to understand disruption, technology, climate, stakeholder expectations and business-model resilience before they crystallise into losses, cognitive diversity and commitment for directors become even more important. Now more than ever, we cannot have directors who cannot be found when the company needs them to make quick decisions.
We shall see if a cap on number of directorships will now finally happen. Among the things I have advocated for – such as improved gender diversity on boards, tenure limits for independent directors, greater focus on value creation by boards – this has been the hardest one to crack. It is not hard to guess why.
