Board Matters

As part of the Corporate Governance Framework, the following principles apply on Board Matters:

Principle 1: Board of Directors’ Conduct of Affairs

Responsibility for corporate governance and oversight of the business and internal affairs of GIL rests with the Board. The Board has adopted formal charters of directors’ functions and pursuant to the Management Agreement has appointed the Manager to manage GIL’s day-to-day business and internal affairs. The Board meets at least four times per year, or more frequently if required. GIL’s Bye-laws also provide for directors to participate in Board meetings by means of teleconference and videoconference.

Board and Board Committees

In discharging its oversight functions, the Board delegates the authority to make certain decisions to three Board Committees without abdicating its responsibilities. Each Board Committee makes decisions on matters within its terms of reference and reports back to the Board. The terms of reference and the structure of each Board Committee are reviewed as and when required.

Matters for Board Approval

The Board’s approval is required for certain decisions including, alterations of any provisions of the Bye-laws or the Management Agreement, changes in the nature of the business of GIL and changes to the accounting policies of GIL and its subsidiaries (collectively, the “Group”) or any change of the auditors of GIL. A list of the material transactions requiring the Board’s approval can be found in the Annual Report.

Induction, Orientation and Training

Dedicated training sessions (approximately 15 hours in total) were conducted for Directors in FY2016 internally as well as by external advisors covering the following:-

  1. Compliance and financial reporting in relation to the Financial Reporting Surveillance Programme and International Financial Reporting Standard
  2. Processes and tools for managing cyber security risks
  3. Product Presentations on GIL’s portfolio of assets, including bank capital securities, collaterised loan obligations and corporate bonds
  4. Industry-related matters, including the macroeconomic outlook and market forecast.

In FY2016, directors were also provided with quarterly regulatory updates covering, among others, the changes to be introduced by the SGX-ST as well as quarterly updates on global events and risks, such as Brexit and the US presidential election. A comprehensive strategy review and planning session was held together with the training session on the macroeconomic outlook and market forecast referred to above for a full-day in FY2016.

Directors also individually attended external seminars and talks in FY2016 to update and enhance their skills and knowledge.

In line with best practices in corporate governance and the Singapore Code, in-coming directors receive a letter of appointment, which provides details on the key terms of their appointment, including their duties and obligations, as appropriate. For example, as part of the induction process,in-coming directors are briefed on their duties in relation to conflicts of interests and disclosure of interests.

Principle 2: Composition and Guidance of the Board of Directors

GIL has a NGC that, in summary, oversees the size and composition of the Board and its Committees and advises the Board on good governance standards and appropriate corporate governance policies. The NGC annually reviews the independent status of directors in accordance with the definitions and guidelines set out in the Singapore Code to ensure an effective and independent Board. The NGC ensures that the Board has a strong and independent element which is able to exercise objective judgment on corporate affairs independently, in particular, from the Manager and 5% shareholders1. The NGC has applied a stricter 5% shareholder test as compared to the Singapore Code’s 10% shareholder test for director independence.

The Board has re-examined its size and considered that the appropriate size for the Board to facilitate effective decision making is five. The NGC conducts evaluations to maintain an appropriate balance of expertise and skills sets amongst the Board and the Board Committees and is satisfied that they currently provide the core competencies such as legal, accounting or finance, investment, risk management, business or management, strategy planning and customer-based experience or knowledge.

Currently, the Board comprises five members, three of whom (the majority) are independent directors. All independent directors have some business or other experience in the industry, in which GIL operates.

The non-executive directors are encouraged to meet regularly without the presence of the Manager, to review the Manager’s and GIL’s performance.

Appointment of Lead Independent Director

Under Guideline 3.3 of the Singapore Code, companies are required to appoint an independent non-executive director to be the lead independent director (the “Lead Independent Director”) in the following circumstances:

  1. where the chairman and the CEO is the same person;
  2. where the chairman and the CEO are immediate family members;
  3. where the chairman is part of the management team; or
  4. where the chairman is not an independent director.

Mr Boon Swan Foo who is the Chairman of the Company is considered non-independent because he holds 12.85% of the shares in GIL as at 10 March 2017. Furthermore, SICIM is the manager of GIL, and Mr Boon Swan Foo is the ultimate beneficial owner and Chairman and Chief Executive Officer of SICIM.

As such, a Lead Independent Director has been appointed to assist the Chairman and the Board to assure effective corporate governance in managing the affairs of the Board and the Company. The Singapore Code further states that the Lead Independent Director should be a member of the NGC.

Mr Adrian Chan Pengee, who is the chairman of the NGC, was appointed as the Lead Independent Director of the Company on 25 February 2016.

The Lead Independent Director performs the following responsibilities and duties:

  1. assisting the Chairman and the Board to assure effective corporate governance in managing the affairs of the Board and the Company;
  2. leading and conducting periodic meetings of the independent directors without the presence of the other directors and providing feedback to the Chairman after such meetings;
  3. coordinating activities of the non-executive directors in circumstances where it would be inappropriate for the Chairman to serve in such capacity; and
  4. acting as the contact point for shareholders where they have concerns and for which contact through the Chairman or the Manager have failed to resolve, or is inappropriate.

Principle 3: Chairman and Chief Executive Officer

GIL has a non-executive, non-independent Chairman of the Board. Mr Boon Swan Foo is considered non-independent because he holds 12.85% of the shares in GIL as at 10 March 2017. Furthermore, SICIM is the manager of GIL, and Mr Boon Swan Foo is the ultimate beneficial owner and Chairman and Chief Executive Officer of SICIM.

However, three out of the fivedirectors on the Board are independent. There are no immediate family member relationships among the Board members, and specifically between the Chairman and Manager Nominated Director. The Chairman and Manager Nominated Director would abstain from voting in respect of any transaction where Manageris a party. In addition, there are no special or additional voting powers conveyed to the Chairman of the Board. The role of the Chairman is to, among others, promote high standards of corporate governance and to lead the Board to ensure its effectiveness on all aspects of its role.

There is no Chief Executive Officer given that GIL has appointed the Manager. The Chairman is also the Chief Executive Officer of the Manager.

Principle 4: Board Membership

The NGC’s responsibilities include overseeing a continual renewal and membership assessment process of the Board for good corporate governance purposes. The key terms of reference of the NGC are:

  1. to review and advise the Board on the composition of the Board and its committees;
  2. to review the performance of the Board, the Chairman, the Deputy Chairman (if any) and other directors of the Board;
  3. to review training and professional development programs for the Board;
  4. to ensure that proper succession plans are in place for consideration by the Board;
  5. to advise the Board on appropriate governance standards and appropriate corporate governance policies for GIL; and
  6. to critically review GIL’s performance against its corporate governance policies on an annual basis or as otherwise deemed appropriate.

For FY2016, the NGC conducted a self-review against the responsibilities set out in the Nomination and Governance Committee Charter and concluded that the NGC had been adequately fulfilling its duties.

The NGC comprises three Directors, of which two are independent Directors. The Chairman of the Committee is Mr Adrian Chan Pengee who is an independent Director. The other committee members are Mr Boon Swan Foo and Mr Ronald Seah Lim Siang.

The NGC coordinates the assessment of the performance of the Board as a whole, the Board Committees, the Chairman of the Board, and the Board’s individual directors and determines annually if a director should be considered independent. The independence of any director who has served on the Board beyond nine years from the date of his first appointment will be rigorously reviewed. The NGC shall provide its views to the Board when the NGC considers that a director:

  1. can still be deemed as independent despite the existence of relationships and circumstances enumerated in guidelines 2.3 and 2.4 of the Singapore Code; or
  2. is not independent even in the absence of relationships and circumstances enumerated in guidelines 2.3 and 2.4 of the Singapore Code.

Process for Selection, Appointment and Re-Election of Directors

The NGC reviews and recommends the size and composition of the Board and, with the assistance of the Manager, identifies and recommends to the Board the relevant directors who are due for retirement, election or re-election at each Annual General Meeting (“AGM”), and for any appointment that is expected or has arisen between AGMs.

Under the Company’s Bye-laws, the directors (other than a Manager Nominated Director) to retire by rotation in each subsequent AGM shall be those who have been longest in office since their last re-election or appointment, and a retiring director (other than a Manager Nominated Director) is eligible for re-election. The Manager Nominated Director will remain in office for a fixed term of three years after appointment, and their term of office is renewable for a further term of three years at the option of the Board. Subject to the provisions of the Bye-laws, GIL ensures that each director (excluding the Manager Nominated Director) submits themselves for re-election at least once every three years.

Succession Planning

During the process for the selection, appointment and re-appointment of directors, the NGC reviews the range of expertise, skills, attributes, composition and the need for progressive renewal of the Board as well as each director’s competencies, commitment, contribution and performance. The NGC specifically looks out for directors who possess the core competencies such as legal, accounting and finance, investment, risk management, business of management, strategy planning and customer-based experience or knowledge. When the need for a new director arises (excluding the Manager Nominated Director), the NGC carries out the following process: it identifies GIL’s needs conducts an external search and then prepares a shortlist of candidates with the appropriate profile for nomination or re-nomination. Where necessary, the Committee may seek advice from external consultants. In

FY2016, no new directors were appointed. The Manager has its own succession planning for its senior management and its performance in managing GIL is reviewed annually by the Board.

Multiple Directorships

When a director has multiple board representations, he or she must ensure that sufficient time and attention is given to the affairs of GIL. Policy, guidelines and procedures have been implemented to review and ensure performance/commitment for directors holding multiple appointments, taking into consideration the director’s number of listed company board representations and other principal commitments. While the Board acknowledges that the effectiveness of each director is best addressed by a qualitative assessment of the directors’ contributions, the Board has determined the maximum number of listed company board representations to which any director may hold concurrently to be six2. Having taken into consideration, among others, the good attendance of all directors for Board and Board Committee meetings in FY2016 the NGC is satisfied that all directors have devoted sufficient time and attention to the matters under their remit for FY2016.

Information on GIL Directors

The key information regarding the directors, such as academic and professional background, shareholdings, chairmanships, directorships and other principal commitments can be found under the “Board of Directors” section and the “Additional SGX-ST Listing Manual Disclosures” section in the Annual Report.

Principle 5: Board Performance

The Board has implemented a process through which the NGC coordinates a formal assessment of the effectiveness and performance of individual directors, including the Chairman of the Board, the Board and the Board Committees on an annual basis. The performance of the individual directors, the Board and the Board Committees are evaluated by each individual director through an assessment survey (questionnaire) covering performance criteria and competencies agreed by the NGC.

Board and Board Committee Performance Evaluation

Each Board member is invited to complete a Board and Board Committee Performance Questionnaire and to submit it directly to the NGC for evaluation. The questionnaire assesses in particular how effective the Board and the Board Committees have been in caring out their specific roles and functions (e.g. for the NGC, whether it effectively determines the independence of independent directors) as well as areas such as the Board’s size and composition, corporate integrity, strategic review, the appropriateness of knowledge and skills sets within the Board and Board committees to maximise performance, the working relationship between the Board and its Committees as well as the working relationship between the Board members.

Individual Director and Chairman Evaluation

Each director is invited to complete an Individual Director Questionnaire to appraise the performance and contribution of each individual director, including the Chairman of the Board. The questionnaire allows each director to assess his fellow directors in the areas of their respective performance, contribution, knowledge on key drivers, risks and opportunities and special expertise beneficial to the Board and to also give suggestions on what the respective directors should improve on or do differently. The Chairman is also assessed via such questionnaire and specific questions that are only applicable to the Chairman are included in the questionnaire (e.g. whether the Chairman ensures that adequate time is available for discussion of all agenda items, in particular strategic issues).

Compilation of Questionnaires and Evaluation of Performance

The completed questionnaires are submitted to the Manager for compilation. The names of directors are omitted from the summary report to encourage more open and frank discussion. Upon completion of the abovementioned process by the Manager, the NGC will assess the results of the questionnaire and report on key findings and recommendations to the Board. The NGC will supplement the evaluation of the Board Committees’ performance with self-reviews conducted by each of the Board Committees against the responsibilities set out in their respective charters, and report any key findings and recommendations to the Board. For individual director evaluations, the NGC will identify areas for improvement and suggest them to the Board and the directors for consideration. The open discussion between the NGC and the Board members will allow each individual director to discharge his duties more effectively.

For FY2016, the Board, taking into consideration the key findings of the NGC, is satisfied that the Board and its Committees, the Chairman and each individual directors have adequately fulfilled their responsibilities.

Principle 6: Access to Information

The Manager provides Board members with complete, adequate and timely information in advance of Board meetings and on an on-going basis, so as to enable the Board to make informed decisions to discharge their duties and responsibilities. For example, the Board has access to monthly management accounts and is provided with such explanation and information as the Board may require from time to time (see Principle 10: Accountability of the Board of Directors and Management below). Directors are also provided with quarterly regulatory updates as well as quarterly updates on global events and risks (see Principle 1: Induction, Orientation and Training above).

For further enquiries, the directors have independent access to the Manager and Company Secretary at all times. The Company Secretary has defined responsibilities, including advising on good corporate governance practices and compliance with general statutory requirements, as set out in the administration agreement entered into between Horseshoe Fund Services Ltd. and GIL. The appointment and removal of the Company Secretary is a matter for the Board as a whole. In the absence of the Company Secretary, an Assistant Company Secretary attends the board meetings.

Each director is entitled to seek independent professional advice (including, but not limited to, legal, accounting and financial advice) at GIL’s expense on any matter concerned with the proper discharge of his or her responsibilities as a director.

Having considered the adequacy and timeliness of the information made available by the Manager, the directors are satisfied with the access to the information provided by the Manager during FY2016.

Footnote:

  1. The term “5% Shareholder” shall refer to a person who has an interest or interests in one or more voting shares in the Company and the total votes attached to that share, or those shares, is not less than 5% of the total votes attached to all the voting shares in the Company. “Voting shares” exclude treasury shares.
  2. This would include analogous positions such the board of a manager of a listed fund.
© Copyright 2016
Global Investments Limited
© Copyright 2016
Global Investments Limited