SGX RegCo pushes for a 9-year limit for independent directors

The regulator said the cap will help the bourse achieve its diversity outcomes.

The Singapore Exchange Regulation (SGX RegCo) will limit the number of years an independent director (IDs) can serve to nine years.

This is after SGX RegCo, through a KPM Study, found that almost half of companies have IDs serving beyond nine years. 

The regulator likewise found that companies are rushing to use the 2-tier vote to retain long-serving directors despite their warning. 

Based on the KPMG study, 70% of 391 long-serving IDs seats up for re-election were put to the 2-tier vote.

“Even for the 172 long-serving ID seats not due for re-election, 73% were put up for re-election via the 2-tier vote,” the regulator said.

“If this is allowed to continue, we may not be able to achieve the renewal and diversity outcomes that we seek. It is therefore timely for SGX RegCo to consult on hard-coding the 9-year limit for independent directors,” it added.

The study also found that most companies report the remuneration of directors, CEOs and key management personnel in bands. Only 35% and 18% of companies disclosed director and CEO remuneration in dollar value, respectively. 

“Disclosures on how remuneration was determined were mostly high level, and companies often did not explain how remuneration, performance and value creation were related,” added the regulator.

Given these findings, SGX RegCo said it will be consulting on whether to require the actual remuneration of directors and CEOs to be disclosed.