Mr Leon Perera asked the Deputy Prime Minister and Minister for Finance (a) whether there are existing regulations on the practice of “overboarding” in Singapore, where individuals hold more board directorships than they can responsibly handle; and (b) if there are none, whether the Government will study introducing such regulations for Singapore-incorporated or Singapore-listed companies.
The Senior Minister of State for Finance (Mr Chee Hong Tat) (for the Minister for Finance): Mr Speaker, the Companies Act does not limit the number of directorships that an individual may hold for Singapore-incorporated companies. All directors, regardless of the number of directorships held, are required to discharge their duties responsibly, and with honesty and reasonable diligence. Those who fail to do so can face enforcement action, including disqualification and debarment.
Singapore-listed companies are subject to additional requirements relating to board appointments, given the public interest involved. Under SGX’s Listing Rules, they are required to disclose the directorships and principal commitments of individuals seeking to be appointed or re-elected to their boards. In addition, under the Code of Corporate Governance, where a director holds a significant number of directorships, the company’s Nominating Committee and Board are to provide a reasoned assessment of the ability of the director to diligently discharge his or her duties.
Sir, on the whole, the practice of individuals holding more board directorships than they can reasonably handle is not prevalent in Singapore. About 95% of directors of Singapore-listed companies hold no more than two directorships and over 80% of directors hold only one directorship.
Mr Speaker: Mr Leon Perera.
Mr Leon Perera: Thank you, Mr Speaker, Sir. And I thank the Senior Minister of State Mr Chee for his reply. I just have one supplementary question. Before that, I declare my interest as a board director of a Singapore company.
Would the Government consider adopting a more prescriptive approach given the fact that there is research that demonstrates that the more board directorships one holds, the less time one can devote to discharging one’s responsibilities as a director effectively and also given international precedence? In the UK, I believe, they do adopt a more prescriptive approach. The UK Corporate Governance Code 2018 which is a promulgated by the Financial Reporting Council, sets certain concrete limits. For example, you are full-time executive director, you cannot hold more than one non-executive directorship of the FTSE 100 company. In the US, while there are no regulations, asset managers and institutional investors also do have a threshold number for the maximum number of directorships that a board director should have before it is considered “overboarding”.
Mr Chee Hong Tat: Mr Speaker, Mr Leon Perera mentioned about the UK. The UK Corporate Governance Code limits top executives to only one FTSE 100 non-executive directorship. However, there is no such limit for chairs and non-executive directors, but individuals must allocate sufficient time to the company to discharge their responsibilities, which is similar to the requirements that we have under our Listing Rules.
The point that Mr Perera made about the US – and for that matter Australia and Hong Kong – they also do not set a limit under the law for the number of directorships that a person can hold. But that responsibility for the individuals, the directors, to be able to discharge their responsibilities diligently, I think that is common across all these jurisdictions.
Ministry of Finance
14 February 2023
https://sprs.parl.gov.sg/search/#/sprs3topic?reportid=oral-answer-3062
Office of the Leader of the Opposition 