The nominating committee: architect of corporate governance
The Business Times article, "The nominating committee: architect of corporate governance," is written by Russell Reynolds Associates Consultant Alvin Chiang. In it, he outlines the changing roles and responsibilities of the nominating committee in ensuring effective boards in the near future. The article is excerpted below.
As the corporate governance landscape evolves, so too must the role of the board and its committees.
Each board committee has its role. Unlike the other committees which are primarily focused on management and the business, the focus of the nominating committee (NC) is, in fact, the board. It recommends director candidates, and sometimes even C-level executives. It takes care of board evaluation and evaluates the independence and time commitment of directors. It oversees governance practices to ensure an effective board.
In other words, the NC is the architect of the organisation’s corporate governance framework.
Failures on the part of the board committees can be traced in part to the work of the NC. For example, when corporate scandals occur, the audit and risk committee tends to come under the spotlight. Many issues however can be traced to organisational culture, and the board sets the tone for this. The behaviour and actions of the board are driven by the people who comprise it. And they are screened and recommended by the NC.
A basic requirement of the NC is to ensure that the board adheres to the rules – and more importantly, the spirit of the rules – of good governance as enunciated in the Code of Corporate Governance. Some of the recent amendments to the Listing Rules and the Code, such as the strengthening of the nine-year rule for director independence, place an even heavier burden on the role of the NC.
The 2019 Singapore Board of Directors Survey by the Singapore Institute of Directors found that 43 per cent of the 127 boards that responded still had independent directors who have served more than nine years. The revised nine-year rule will come into full effect on 1 January 2022. Hopefully, by then, most boards would have responded not only to mandatory requirements of the Listing Rules, but also to the spirit of the Code.
To read the full article,