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SGX Regulator: Disclosures of Board Diversity Are Imperative

Disclosure rules on board diversity have come into force as investors increasingly recognize board diversity as “business imperative,” said Singapore Exchange Regulation chief executive Tan Boon Gin in a speech on a webinar on leadership diversity and firm performance.

“Some investors have gone so far as to abstain from the election of male directors, when there are no female directors on the board,” he said.

Singapore-listed companies are raising questions about what diversity targets should look like and how to find a diverse set of candidates. Concerning building out a diverse board, Tan believes that “a diversity of candidates can only come from a diversity of sources.” He suggested that boards may want to consider engaging an external search firm or “insisting that a diverse slate of candidates be presented for consideration.” He believes that directors can also consider sponsoring or mentoring diverse leaders, whether within their firm or through extended networks.  

Tan advised firms to provide transparency for investors to scrutinise if the board is doing enough and letting them vote accordingly. He also gave insights into how a diverse board can function effectively. This can be accomplished by encouraging “healthy board dynamics, to be able to hold respectful debate on issues in a collegiate manner, while still making decision in a timely fashion.”

Euleen Goh, a board member for DBS Bank, who was also panellist at the webinar with Tan, said that women’s representation at board levels has yet to fully catch on, mostly due to the “clubby” nature of board appointments.

But Goh also noted that there is a robust and growing pipeline of women in senior management roles in Singapore, which over time, will add more diversity to Singaporean -listed company’s’ board. “I am pretty relaxed about it. We will get there,” she said.

Boards of Singaporean publicly listed companies will likely have to review renewal and diversity goals as they appoint first-time directors this year, under a new rule that makes directors who have served nine years no longer eligible to be independent directors without shareholders’ approval.