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Do you form your board of director for your organization?
Do your organization practice corporate governance?
Corporate governance is the mechanisms, processes and relations by which corporations are controlled and directed. Governance structures and principles identify the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders and include the rules and procedures for making decisions in corporate affairs.
Corporate governance continues to be our main focus as CG tops the Boardroom agenda and best practices for most top-tier organisations. We provide an array of services in assisting Board of Directors in pursuing greater heights in Corporate Governance practices.
Independent director means a director who is independent of management and free from any business or other relationship which could interfere with the exercise of independent judgment or the ability to act in the best interests of an applicant or listed corporation. Without limiting the generality of the foregoing, an independent director is one who –
(a) is not an executive director of the applicant, listed corporation or any related corporation of such applicant or listed corporation (each corporation is referred to as the “said Corporation”);
(b) has not been within the last 2 years and is not an officer (except as a non-executive director) of the said Corporation. For this purpose, “officer” has the meaning given in section 4 of the Companies Act 1965.
(c) is not a major shareholder of the said Corporation;
(d) is not a family member of any executive director, officer or major shareholder of the said Corporation;
(e) is not acting as a nominee or representative of any executive director or major shareholder of the said Corporation;
(f) has not been engaged as an adviser by the said Corporation under such circumstances as prescribed by the Exchange or is not presently a partner, director (except as an independent director) or major shareholder, as the case may be, of a firm or corporation which provides professional advisory services to the said Corporation under such circumstances as prescribed by the Exchange;
(g) has not engaged in any transaction with the said Corporation under such circumstances as prescribed by the Exchange or is not presently a partner, director or major shareholder, as the case may be, of a firm or corporation (other than subsidiaries of the applicant or the listed corporation) which has engaged in any transaction with the said Corporation under such circumstances as prescribed by the Exchange.
Independent directors act as a guide to the company. Our roles broadly include improving corporate credibility and governance standards functioning as a watchdog, and playing a vital role in risk management. Independent directors play an active role in various committees set up by company to ensure good governance.
Independent directors should make up at least two-thirds of the directors in the audit committees of listed companies to oversee the financial reporting process and disclosure of the company’s financial information, ensure compliance with listing and other legal requirements, the disclosure of related party transactions and qualification in the draft audit report, among other things.
If the board intends to retain an independent director beyond nine years, it should justify and seek annual shareholders’ approval.
If the board continues to retain the independent director after the twelfth year, the board should seek annual shareholders’ approval through a two-tier voting process.