eGuide to CG Code

The Board should establish a NC to make recommendations to the Board on all board appointments, with written terms of reference which clearly set out its authority and duties. The NC should comprise at least three directors, the majority of whom, including the NC Chairman, should be independent. The lead independent director, if any, should be a member of the NC. The Board should disclose in the company's Annual Report the names of the members of the NC and the key terms of reference of the NC, explaining its role and the authority delegated to it by the Board.
 
A. Explanation

This Guideline describes the structure, composition and disclosures of the NC.

Given the importance and scope of Board appointments and directorship matters, it is recommended that this role be delegated to the NC, a Board Committee established for such purposes.

The Board may, in limited circumstances, choose not to have an NC, for example, when the size of the Board is small and it is deemed that the NC functions can be effectively assumed by the full Board. It should be noted that not having an NC does not eliminate the responsibilities that would otherwise be assumed by the NC. In addition, a company needs to provide clear reasons for its decision in its annual report if it deems that the forming of a NC is not necessary.

As with all Board Committees, the NC needs to be established with well-defined written terms of reference that sets out its duties and authorities. These duties and authorities, together with the names of the NC members, should be disclosed in the annual report.

The composition of the NC is as follows:

  • A minimum of three directors.
  • The majority of members including the NC Chairman should be independent.
  • The Lead ID should be a member of the NC.

Having the majority members of the NC be independent is important because its function is to ensure the independence and objectivity of individual directors and the Board collectively. The Lead ID should also be a member of the NC as he would be active in matters relating to directorships.  As a best practice, the Board should consider appointing the Lead ID to chair the NC.

 

B. SGX Disclosure Guide
  • Nil.

 

C. Related Rules and Regulations
  • Nil.

 

D. CG Guides
  • NC Guide 1.1: Introduction [NC Composition].
  • NC Guide 1.2: Structure and Authority [NC Composition].
  • NC Guide 1.3: Terms of Reference [NC Composition].
  • NC Guide 1.4: Independence and Objectivity [NC Composition].
  • NC Guide 1.5: Role of NC in NC Appointments [NC Composition].
  • NC Guide 1.6: Selection of NC Members [NC Composition].
  • NC Guide 1.7: Selection of NC Chairman [NC Composition].
  • NC Guide 1.8: Tenure of the NC members [NC Composition].
  • NC Guide Appendix 1C: Sample NC Terms of Reference [NC Composition].
  • NC Guide 3.4: Board Composition [Nomination and Appointment Process].
  • NC Guide 4.6: The Lead Independent Director [Director Independence].
  • NC Guide 8.2: Disclosure Requirements [Disclosure Requirements and Guidelines].

 

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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