Entire Section

  • B. BOARD COMPOSITION AND NOMINATION

    • B.1 Board composition, succession and evaluation

      • Principle

        The board should have a balance of skills, experience and diversity of perspectives appropriate to the requirements of the issuer’s business, and should ensure that the directors devote sufficient time and make contributions to the issuer that are commensurate with their role and board responsibilities. It should ensure that changes to its composition can be managed without undue disruption. It should include a balanced composition of executive and non-executive directors (including independent non-executive directors) so that there is a strong independent element on the board, which can effectively exercise independent judgement. Non-executive directors should be of sufficient calibre and number for their views to carry weight.

      • Code Provisions

        • B.1.1

          The independent non-executive directors should be identified in all corporate communications that disclose the names of directors.

        • B.1.2

          An issuer should maintain on its website and on the Exchange’s website an updated list of its directors identifying their roles and functions and whether they are independent non-executive directors.

        • B.1.3

          The board should review the implementation and effectiveness of the issuer’s policy on board diversity on an annual basis.

        • B.1.4

          An issuer should establish mechanism(s) to ensure independent views and input are available to the board and disclose such mechanism(s) in its Corporate Governance Report. The board should review the implementation and effectiveness of such mechanism(s) on an annual basis.

      • Recommended Best Practices

        • B.1.5

          The board should conduct a regular evaluation of its performance.

        • B.1.6

          The board should state its reasons if it determines that a proposed director is independent notwithstanding that the individual holds cross-directorships or has significant links with other directors through involvements in other companies or bodies.

          Note:    A cross-directorship exists when two (or more) directors sit on each other’s boards.
           

    • B.2 Appointments, re-election and removal

      • Principle

        There should be a formal, considered and transparent procedure for the appointment of new directors. There should be plans in place for orderly succession for appointments. All directors should be subject to re-election at regular intervals. An issuer must explain the reasons for the resignation or removal of any director.

      • Code Provisions

        • B.2.1

          Directors should ensure that they can give sufficient time and attention to the issuer’s affairs and should not accept the appointment if they cannot do so.

        • B.2.2

          Every director, including those appointed for a specific term, should be subject to retirement by rotation at least once every three years.

        • B.2.3

          If an independent non-executive director has served more than nine years, such director’s further appointment should be subject to a separate resolution to be approved by shareholders. The papers to shareholders accompanying that resolution should state why the board (or the nomination committee) believes that the director is still independent and should be re-elected, including the factors considered, the process and the discussion of the board (or the nomination committee) in arriving at such determination.

        • B.2.4

          Where all the independent non-executive directors of an issuer have served more than nine years on the board, the issuer should:
           
          (a)    disclose the length of tenure of each existing independent non-executive director on a named basis in the circular to shareholders and/or explanatory statement accompanying the notice of the annual general meeting; and
           
          (b)    appoint a new independent non-executive director on the board at the forthcoming annual general meeting1.
           

          1 The appointment of a new independent non-executive director requirement will come into effect for the financial year commencing on or after 1 January 2023.

    • B.3 Nomination Committee

      • Principle

        In carrying out its responsibilities, the nomination committee should give adequate consideration to the Principles under B.1 and B.2.

      • Code Provisions

        • B.3.2

          The nomination committee should make available its terms of reference explaining its role and the authority delegated to it by the board by including them on the Exchange’s website and issuer’s website.

          • B.3.3

            Issuers should provide the nomination committee sufficient resources to perform its duties. Where necessary, the nomination committee should seek independent professional advice, at the issuer’s expense, to perform its responsibilities.

            • B.3.1

              The nomination committee should be established with specific written terms of reference which deal clearly with its authority and duties. It should perform the following duties:-

              (a)    review the structure, size and composition (including the skills, knowledge and experience) of the board at least annually and make recommendations on any proposed changes to the board to complement the issuer’s corporate strategy;
               
              (b)    identify individuals suitably qualified to become board members and select or make recommendations to the board on the selection of individuals nominated for directorships;
               
              (c)    assess the independence of independent non-executive directors; and
               
              (d)    make recommendations to the board on the appointment or re-appointment of directors and succession planning for directors, in particular the chairman and the chief executive.
               

            • B.3.4

              Where the board proposes a resolution to elect an individual as an independent non-executive director at the general meeting, it should set out in the circular to shareholders and/or explanatory statement accompanying the notice of the relevant general meeting:

              (a)    the process used for identifying the individual and why the board believes the individual should be elected and the reasons why it considers the individual to be independent;
               
              (b)    if the proposed independent non-executive director will be holding their seventh (or more) listed company directorship, why the board believes the individual would still be able to devote sufficient time to the board;
               
              (c)    the perspectives, skills and experience that the individual can bring to the board; and
               
              (d)    how the individual contributes to diversity of the board.