Practice of individuals holding more board directorships than they can reasonably handle is “not prevalent” in Singapore, says Chee Hong Tat

Practice of individuals holding more board directorships than they can reasonably handle is “not prevalent” in Singapore, says Chee Hong Tat

SINGAPORE — About 95 per cent of directors of Singapore-listed companies hold no more than two directorships, and over 80 per cent of directors hold only one directorship, said Senior Minister of State for Finance Chee Hong Tat.

“The practice of individuals holding more board directorships than they can reasonably handle is not prevalent in Singapore, ” Mr Chee said.

He said under Singapore Exchange(SGX)’s listing rules, they are required to disclose the directorships and principal commitments of individuals seeking to be appointed or re-elected to their boards.

“In addition, under the code of corporate governance, where director holds a significant number of directorships, the company’s nominating committee and board are to provide a reasoned assessment of the ability of the director to diligently discharge his or her duties,” Mr Chee added.

Companies Act does not limit the number of directorships

While the Companies Act does not limit the number of directorships that an individual may hold for Singapore-incorporated companies, Mr Chee stressed that Singapore-incorporated companies are subjected to additional requirement relating to board appointments given the public interest involved.

“All directors, regardless of the number of directorship held, are required to discharge their duties responsibly, and with honesty and reasonable diligence. Those who failed to do so can face enforcement action, including disqualification and debarment, ” Mr Chee said.

Leon Perera questioned whether there are existing regulations on the practice of ‘overboarding’ in Singapore

Leon Perera, Member of Parliament for Aljunied GRC from Workers’ Party, asked the Deputy Prime Minister and Minister for Finance whether there are existing regulations on the practice of ‘overboarding’ in Singapore.

He refers to the condition where individuals hold more board directorships than they can responsibly handle.

“If there are none, whether the Government will study introducing such regulations for Singapore  incorporated or Singapore-listed companies, ” Leon Perera asked in his parliamentary question.

Mr Leon Perera further questioned Mr Chee, asking if the government would apply prescriptive approaches, given research that demonstrates that the more board directorships one holds, the less time they can devote to effectively discharging their responsibilities as a director.

He added that the UK adopted a more prescriptive approach to the UK Corporate Governance Code of 2018, which is promulgated by the Financial Reporting Council, and does set certain concrete limits.

“For example, if you’re a full time executive director, you cannot hold more than one non-executive directorship of a FTSE (The Financial Times Stock Exchange) 100 companies.”

While there are no regulations in the United States, asset managers and institutional investors also do have a threshold number for the maximum number of directorships that a board director should have before it’s considered overboarding.

In reply, Mr Chee said UK Corporate Governance Code limits non-executive directorship to only one FTSE 100 non-executive directorship.

However, there is no such limit for chairs and non-executive directors, but individuals must allocate sufficient time to the company to discharge their responsibilities.

“So it’s similar to the requirements that we have under our listing rules.”

Mr Chee said Australia and Hong Kong also did not set a limit under the law for the number of directorships that a person can hold.

“But that responsibility for the individual, the director to be able to discharge their responsibilities diligently, I think that is common across all these jurisdictions.”

Ms Tin Peiling did not think her appointment at Grab was an issue

In January, Southeast Asia’s leading super-app company, Grab, appointed MacPherson MP Tin Pei Ling as its director of public affairs and policy in Singapore.

Singapore’s ruling party, the People’s Action Party (PAP), did not know the scope of Ms Tin Peiling’s appointment when it gave the go-ahead for her to assume the position. This was revealed in the party’s Facebook post on Friday(10 February) in response to public furore over the possible conflicts of interest arising from Ms Tin’s public duties as an MP and her private job at Grab.

PAP wrote that the Macpherson Member of Parliament had informed the party about her appointment and the nature of the job in September last year. The party noted this and did not object.

Ms Tin has previously disregarded concerns over the concerns over conflict of interest and said she would continue with the appointment, saying that, “As to which capacity I represent at any time: I will be transparent and above board.”

She currently chairs the Government Parliamentary Committee (GPC) for Communications and Information, and is a member of the GPC for Culture, Community and Youth.

These appointments, apart from her position as an elected MP, raised eyebrows as there are overlapping aspects of the duties as a Director of Public Affairs and Policy at Grab.

“Overboarding” PAP MPs

While Minister Chee claimed that the practice of individuals holding more board directorships is “not prevalent” in Singapore, a search on SGX website revealed that Sitoh Yih Pin, PAP MP for Potong Pasir SMC, was a director to several companies and appointment of various organisations, as of April 2021.

Similar to Ms Tin, Mr Sitoh is also a Chairman of the GPC for Culture, Community and Youth. He is also a member of the GPC for Ministries for Law and Home Affairs. As GPC chairman and member and directors of various companies, there do also seem to be areas of conflict of interest

Besides his commitment to his constituency, the document also stated that Sitoh Yih Pin as an independent and non-executive director of Yeo Hiap Seng Limited. He was the Lead Independent Director from 1 January to 15 July 2022, according to info from the company’s official site.

Mr Sitoh is also chairman and co-founder of CLA Global TS (formerly Nexia TS). According to ACRA data, his earliest appointment as a director in the firm was in 2008.

“Sitoh’s professional experience Includes involvement in Statutory Audits, Mergers and Acquisitions and Initial Public Offerings Etc. He is also an independent director In several public listed companies,” the introductory of the company wrote.

PAP former MP Yeo Guat Guang had 64 appointments

The worst of all might be Yeo Guat Kwang, a former PAP MP who had 64 appointments on top of his position as a MP, even the word “excessive” seems grossly inadequate to describe his portfolio.

His appointments in various positions can be viewed on archived Singapore parliament website.

 

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