|The Board has a formal and transparent process for the appointment and re-appointment of directors, taking into account the need for progressive renewal of the Board.|
The foundation of an effective Board begins with the appointment of the right balance and mix of qualified directors who, collectively, can govern the company with the goal of its long-term success. The job of determining the appropriate size, structure, composition, membership and progressive renewal of the Board often rests with the Nominating Committee (NC). Howsoever it is done, it is important that the Board appointment process is formal and transparent.
Towards this end, the Provisions set out:
- The formation, role and duties of an NC (Provision 4.1).
- The composition of the NC (Provision 4.2).
- The disclosures and guidance on the selection, appointment and re-appointment of directors (Provision 4.3).
- The responsibilities of the NC in relation to director independence (Provision 4.4).
- Guidance to ensure that a director is able to discharge his duties (Provision 4.5).
The Board establishes a Nominating Committee (“NC”)10 to make recommendations to the Board on relevant matters relating to:
a. the review of succession plans for directors, in particular the appointment and/or replacement of the Chairman, the CEO and key management personnel11;
The NC comprises at least three directors, the majority of whom, including the NC Chairman, are independent. The lead independent director (Lead ID), if any, is a member of the NC.
The company discloses the process for the selection, appointment and re-appointment of directors to the Board, including the criteria used to identify and evaluate potential new directors and channels used in searching for appropriate candidates in the company’s annual report.
The NC determines annually, and as and when circumstances require, if a director is independent, having regard to the circumstances set forth in Provision 2.1. Directors disclose their relationships with the company, its related corporations, its substantial shareholders or its officers, if any, which may affect their independence14, to the Board.
The NC ensures that new directors are aware of their duties and obligations. The NC also decides if a director is able to and has been adequately carrying out his or her duties as a director of the company.