Feedback from Securities Commission on an article in The Star, published here as well:
We refer to Tan Sri Lin See-Yan’s column titled “Corporate Governance Blueprint 2011” (StarBizWeek, Dec 3).
The Securities Commission (SC) welcomes all feedback and Lin’s views will be taken into consideration as part of the collective feedback on the CG Blueprint and the Consultation Paper, which we are now compiling.
However, we wish to clarify three points in the column.
The recommendations in the Blueprint seek to shape corporate behaviour and to reinforce a culture of good corporate governance in which greater self-discipline and market discipline will complement regulatory discipline. Unfortunately, self-discipline and market discipline cannot just happen without intervention. Laying the foundations for a culture of good corporate governance requires a certain amount of rules and regulations that will shape behaviour, which in time will develop into norms. Rules are intended to represent the boundaries of appropriate conduct and to act as a guide for desired behaviour so that over time, the spirit and substance of the rules are internalised and become a way of corporate life.
On the target of 30% women directors, this is essential to ensure that companies devote appropriate focus and resources to making gender diversity on boards happen. As we know, what gets measured gets done. After several decades, we still have less than 10% women on the boards of plcs. If we can significantly increase this within a compressed period by setting targets and monitoring performance, there is no reason why it should not be done.
However, under no circumstances is the SC advocating that this target should be achieved at the expense of calibre and substance. On the contrary, the CG Blueprint is clear that regardless of gender, directors must have the requisite skills, competence, knowledge and experience.
This is why we emphasise the creation of a directors’ registry (which enables qualified and competent men and women to be identified as suitable director candidates), the directors’ compensation study to ensure that plcs are able to attract top talent by paying remuneration commensurate with skills, as well as the continuing professional development of directors.
Thirdly, we do not require directors who have served nine years to retire or to step down. They are allowed to continue to serve as non-independent directors. This will enable the board to undertake fresh recruitment and injection of new talent as independent directors while still retaining the longer-serving directors as non-independent.
Finally, it should be noted that Blueprint had the benefit of extensive discussions with industry, CG experts and a multitude of stakeholders whose views had been actively canvassed during the formulation of the recommendations.
Nevertheless, we have still opened the recommendations to an extensive period of consultation and welcome feedback on the recommendations.
Senior general manager & head of corporate affairs,