New ID term limit a catalyst for improving board performance
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Next Generation BoardsDiversityCulture RiskBoard and CEO AdvisoryBoard EffectivenessBoard Director and Chair Search
The Business Times article, "New ID term limit a catalyst for improving board performance," was written by Russell Reynolds Associates Consultant Alvin Chiang​, where he outlines how the new SGX rule on term limits for independent directors will help raise the bar on board independence. The article is excerpted below.​ 
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The Business Times

Come Jan 1, 2022, the SGX rule on term limits for independent directors (IDs) will come into effect. This term limit is set at nine years, beyond which an ID can no longer be considered independent unless that director passes a two-tier vote, of which the second tier comprises shareholders who are not the board directors and the chief executive officer, and their associates. In addition to this, the Exchange will now require independent directors to make up a third of the board. 

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Boards' response: A burning platform? or opportunity for meaningful change? 
While there are forward-looking boards, which as part of their succession planning have used these past three years to make the necessary arrangements, our cursory analysis of SGX mainboard companies revealed that quite a fair number have yet to do so and risk running afoul of the rules once they kick in. 

One can only speculate on the reasons as to why this is so, but it is likely that the directors on these boards have decided to try and press on with the two-tier voting process. Case in point: In a BT article ( April 9, 2021), the National University of Singapore's associate professor Mak Yuen Teen pointed out that 27 companies had already implemented two-tier voting for 34 IDs in 2020. 

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What's your board looking like? 
A skill/experience matrix is one of the common and often-used methods boards use to obtain a view of its current composition. This typically requires mapping each director's skills and experiences and analysing them against what the board thinks are important traits to the business. While there is some degree of judgement involved, it helps provide some clarity around what each director brings to the table. 

Most boards, as part of their annual evaluation, often stop at that. But why not take it one step further, and contrast this against additional director skillsets deemed necessary to help the company achieve its long-term strategic vision? Conversely, are any of the existing traits less relevant in the context of the future economy? When do you think these changes will need to happen? 

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Having that broad, independent perspective does matter, and the board that can collectively draw upon the breadth of expertise it has at its disposal would not only be an invaluable resource to the management team. 

That diversity also serves as the foundation for good corporate governance, helping to shape corporate decisions that affect the sustainability and longevity of the enterprise in the long run. 

To read the full article, click here.