Incoming directors should receive comprehensive and tailored induction on joining the Board. This should include his duties as a director and how to discharge those duties, and an orientation program to ensure that they are familiar with the company's business and governance practices. The company should provide training for first-time director1 in areas such as accounting, legal and industry-specific knowledge as appropriate.
It is equally important that all directors receive regular training, particularly on relevant new laws, regulations and changing commercial risks, from time to time.
The company should be responsible for arranging and funding the training of directors. The Board should also disclose in the company's Annual Report the induction, orientation and training provided to new and existing directors.
This Guideline describes the importance and types of training for directors.
A competent and effective director needs to have a good understanding and knowledge of the company as well as the roles, functions and responsibilities of directors. In many respects, being a director is a profession, and one that is increasingly demanding.
First-time directors, especially, require an understanding and appreciation that his role is different from the role he may have previously held, such as CEO or member of senior management.
Moving from management to a director’s role is more than a mere change of reporting responsibilities. It is also a major change in identity and mindset. Governing requires not just a different perspective, but also a different set of skills and knowledge.
Training for directors can be categorised in several ways. Some aspects of which are covered by this Guideline:
- By content:
- Business: matters relevant to the sector, industry, business and functions of the company.
- Directorship: roles, responsibilities and functions of the Board and its directors.
- By timing:
- Induction: training on first appointment to the Board.
- Ongoing: training on a continual basis.
- By means:
- On-the-job: learning from being engaged in actual Board work.
- Informal: self-learning, e.g., through reading relevant reports and journals.
- Structured: attending formal classes conducted by experienced trainers and mentors with facilitated peer sharing.
- By sources:
- In-house: usually necessary when subject relates to company-specific matters.
- External: typically offered by professional bodies.
The emphasis on continuing training for existing directors recognises the evolving demands on directors in an ever-changing and demanding business environment. These changes require companies to be flexible and adapt their strategies and responses. Thus it is crucial for Boards and directors to be well-equipped to play a key role in this evolution.
Rules and regulations governing companies and directorship are also continually changing. It is important for directors to stay abreast and be informed of, and to understand and conform to, these new rules.
If directors are to stay up-to-date, competent and relevant, continuing training and professional development of each director is essential.
B. SGX Disclosure Guide
- Are new directors given formal training? If not, please explain why.
- What are the types of information and training provided to (i) new directors and (ii) existing directors to keep them up-to-date?
C. Related Rules and Regulations
D. CG Guides
- NC Guide 5.1: Introduction [Professional Development].
- NC Guide 5.2: Importance of Training for Directors [Professional Development].
- NC Guide 5.3: Professional Development Policy [Professional Development].
- NC Guide 5.4: Types of Professional Development [Professional Development].
- NC Guide 5.5: Professional Development Implementation [Professional Development].
- NC Guide Appendix 5B-1: Training Requests by Directors [Professional Development].
- NC Guide Appendix 5C: SID Continuing Professional Development Policy [Professional Development].
- NC Guide Appendix 5D: SID Professional Development Curriculum [Professional Development].
E. Related Articles
- “Back to basics: financial literacy for Board members” by Barbara Voskamp. (446KB)
- “Your first Board meeting” by Michael Gray. (48KB)
- “Cutting it as a director” by Benedict Lim. (46KB)
A first time director is a director who has no prior experience as a director of a listed company.