Every company should appoint an independent director to be the lead independent director where:
The lead independent director (if appointed) should be available to shareholders where they have concerns and for which contact through the normal channels of the Chairman, the CEO or the chief financial officer (or equivalent) (the "CFO") has failed to resolve or is inappropriate.
This Guideline describes the circumstances in which a Lead Independent Director (Lead ID) should be appointed, and his role.
Ideally, the Board Chairman is an Independent Director (ID) so that there are effective checks and balances on management, and there is an appropriate balance of power and interests on the Board that enhances the objectivity and independence of the Board’s decision-making (see the Explanation for Guideline 3.1).
It is common for family- and founder-controlled companies to combine the CEO and Chairman positions in one person, or have a Chairman and CEO who are related to each other.
In such situations, the Board should appoint a Lead ID from the group of IDs. (Guideline 2.2 separately requires the number of IDs to be increased to at least half of the Board.)
One of the Lead ID’s duties is to act as an alternate channel for shareholders when the normal communications with the Chairman, CEO or CFO are ineffective. Guideline 3.4 describes the duty of the Lead ID in leading discussions of IDs. Further guidance on Lead ID duties is found in the Nominating Committee Guide.
Although this Guideline describes the circumstances for which a Lead ID should be appointed, leading practices recommend that this position should be appointed on all Boards. This will facilitate the decision-making and resolution (under the Lead ID leadership) of matters that involve the Board Chairman.
B. SGX Disclosure Guide
C. Related Rules and Regulations
D. CG Guides
- Board Guide 2.5: Board Leadership [Board Composition].
- Board Guide 2.9: Independence [Board Composition].
- Board Guide Appendix 1J: “Comply or Explain” – Examples of Non-Compliance: 2. Separation of the Chairman and CEO [Corporate Governance].
- Board Guide Appendix 2F: Board and Board Committees’ Composition Requirements [Board Composition].
- NC Guide 4.6: The Lead Independent Director [Director Independence].
- NC Guide Appendix 3C: Types of Directors [Nomination and Appointment Process].
- NC Guide Appendix 4D: Sample Terms of Reference for Lead Independent Director [Director Independence].
- NC Guide Appendix7B-1: Succession Plan for Board Chairman [Succession Planning].
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