eGuide to CG Code

The Board may delegate the authority to make decisions to any board committee but without abdicating its responsibility. Any such delegation should be disclosed.
 
A. Explanation

This Guideline concerns the delegation of authority by the Board to Board Committees.

As described in Guideline 1.1, the scope of a Board’s role and responsibilities is a broad one. If it were to involve itself in every matter, it would be difficult to make decisions on the many matters in a timely manner. The Board is therefore empowered to establish specific Board Committees that comprise directors equipped with the relevant expertise, experience and skillsets. These Committees may, in turn, engage professionals to help to discharge their duties and responsibilities. It is required that any delegation of authority by the Board is disclosed in the annual report.

Some of the commonly established Board Committees include the Audit Committee (required for listed companies under Section 201B(1) of the Companies Act), Nominating Committee, Remuneration Committee, and Board Risk Committee.  Other types of Board Committees include the Executive Committees and Safety and Health Committees.

Regardless of the number or type of Board Committees, the Board is ultimately accountable for all decisions made. Where there is a specific delegation of decision-making, the Board still ultimately retains responsibility. In a nutshell, the Board can delegate but can never discharge its responsibilities. The best practices in this regard include:

  • Each Board Committee has written Terms of Reference that sets out its authority and duties.
  • Where there are significant matters, these can be delegated to the Board Committees for deliberations. However, recommendations are to be submitted to the Board for consideration and final approval.
  • As a matter of standard procedure, each Board Committee is to submit a report of its deliberations and any decisions taken, to each Board meeting.
  • The names and roles of members of each Board Committee and its precise delegated authority are to be disclosed in the annual report.

 

B. SGX Disclosure Guide
  • Nil.

 

C. Related Rules and Regulations
  • Section 201B(1) of the Companies Act: Audit Committees.
  • SGX MR 704(8) and CR 704(7): Audit Committee to have at least three members.

 

D. CG Guides
  • Board Guide 2.2: Authority [Board Composition].
  • Board Guide 2.3: Terms of Reference [Board Composition].
  • Board Guide 2.6: Board Committees [Board Composition].
  • Board Guide Appendix 2D: Sample Board Terms of Reference [Board Composition].
  • Board Guide Appendix 2G: Guidelines for Executive Committees [Board Composition].
  • Board Guide Appendix 2H: Sample Terms of Reference for an Executive Committee [Board Composition].
  • Board Guide Appendix 2I: Sample Terms of Reference for a Health, Safety and Environment Committee [Board Composition].
  • Board Guide Appendix 2J: Sample Terms of Reference for an IT Governance Committee [Board Composition].
  • Board Guide Appendix 2K: Sample Terms of Reference for a Strategy Committee [Board Composition].
  • NC Guide 1.2: Structure and Authority [NC Composition].
  • NC Guide 1.3: Terms of Reference [NC Composition].
  • NC Guide Appendix 1C: Sample NC Terms of Reference [NC Composition].
  • RC Guide 1.2: Structure and Authority [RC Composition].
  • RC Guide 1.3: Terms of Reference [RC Composition].
  • BRC Guide 1.3 Structure and Authority [BRC Composition].
  • BRC Guide 1.5: Terms of Reference [BRC Composition].
  • AC Guide 1.2: Structure and Authority [AC Composition].
  • AC Guide 1.3: Terms of Reference [AC Composition].

 

E. Related Articles

 

eGuide to CG Code
Overview
Board Matters
Principle 1
Guideline 1.1
Guideline 1.2
Guideline 1.3
Guideline 1.4
Guideline 1.5
Guideline 1.6
Guideline 1.7
Principle 2
Guideline 2.1
Guideline 2.2
Guideline 2.3
Guideline 2.4
Guideline 2.5
Guideline 2.6
Guideline 2.7
Guideline 2.8
Principle 3
Guideline 3.1
Guideline 3.2
Guideline 3.3
Guideline 3.4
Principle 4
Guideline 4.1
Guideline 4.2
Guideline 4.3
Guideline 4.4
Guideline 4.5
Guideline 4.6
Guideline 4.7
Principle 5
Guideline 5.1
Guideline 5.2
Guideline 5.3
Principle 6
Guideline 6.1
Guideline 6.2
Guideline 6.3
Guideline 6.4
Guideline 6.5
Remuneration Matters
Principle 7
Guideline 7.1
Guideline 7.2
Guideline 7.3
Guideline 7.4
Principle 8
Guideline 8.1
Guideline 8.2
Guideline 8.3
Guideline 8.4
Principle 9
Guideline 9.1
Guideline 9.2
Guideline 9.3
Guideline 9.4
Guideline 9.5
Guideline 9.6
Accountability and Audit
Principle 10
Guideline 10.1
Guideline 10.2
Guideline 10.3
Principle 11
Guideline 11.1
Guideline 11.2
Guideline 11.3
Guideline 11.4
Principle 12
Guideline 12.1
Guideline 12.2
Guideline 12.3
Guideline 12.4
Guideline 12.5
Guideline 12.6
Guideline 12.7
Guideline 12.8
Guideline 12.9
Principle 13
Guideline 13.1
Guideline 13.2
Guideline 13.3
Guideline 13.4
Guideline 13.5
Shareholder Rights and Responsibilities
Principle 14
Guideline 14.1
Guideline 14.2
Guideline 14.3
Principle 15
Guideline 15.1
Guideline 15.2
Guideline 15.3
Guideline 15.4
Guideline 15.5
Principle 16
Guideline 16.1
Guideline 16.2
Guideline 16.3
Guideline 16.4
Guideline 16.5
eGuide Glossary
Disclosure of CG arrangements
The Role of Shareholders

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