To facilitate a more effective check on Management, non-executive directors are encouraged to meet regularly without the presence of Management.
This Guideline discusses about the need for private sessions for Non-Executive Directors (NEDs).
NEDs are separate from the management of the company. Some management members are on the Board (as Executive Directors or EDs). There are some matters that are best discussed among NEDs without the presence of management and even the EDs. These include the performance of management, dynamics of the Board-management relationship, and objective assessments of management’s ideas and proposals. Most of these matters will, in fact, be brought to the EDs’ attention in due course, usually in the full Board meeting. However, it could be more candid and productive for them to be discussed beforehand in private sessions without management’s presence.
While this Guideline supports having these private sessions of NEDs on a regular basis, it does not mean that they occur without the knowledge of the EDs. In fact, it is healthy for the meetings to be openly known by the EDs. It is also preferable if they are held as a matter of routine as that will help ameliorate any concerns about specific issues being dealt with.
As there are two types of NEDs – the Independent Directors (IDs) and the Non-Independent Non-Executive Directors (NI-NEDs) – and where particular issues relate to independence or IDs, the private session(s) should then involve only IDs. For Boards where there is a Lead ID, these private sessions involving IDs (versus NEDs) are more likely to occur.
B. SGX Disclosure Guide
C. Related Rules and Regulations
- Section 157(1) of the Companies Act: As to the Duty and Liability of Officers.
D. CG Guides
- Board Guide 5.2: General Duties of Directors [Director Duties].
- Board Guide 5.8: Types of Directors [Director Duties].
- Board Guide 5.10: The Non-Executive Director [Director Duties].
- NC Guide 3.2: Types of Directors [Nomination and Appointment Process].
- NC Guide Appendix 3C: Types of Directors [Nomination and Appointment Process].
- NC Guide 4.6: The Lead Independent Director [Director Independence].
- NC Guide Appendix 4D: Sample Terms of Reference for Lead Independent Director [Director Independence].
E. Related Articles
- “Whither the lead independent director” by Adrian Chan. (58KB)
- “Role of non-executive directors in strategic decision-making” by Eugene Kang. (56KB)