4. Corporate Governance Part 4

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Questions and Answers

What is the maximum remuneration band for disclosing the amounts for the top five key management personnel as stated in Provision 8.1?

S$200,000

S$400,000

S$250,000 (correct)

S$300,000

Which of the following is not a requirement of Listing Rule 1207(10D) concerning remuneration disclosure?

Total remuneration for all employees (correct)

Individual remuneration for all directors and the CEO

Percentage terms for base salary

Breakdown of stock options granted

When does Listing Rule 1207(10D) take effect for annual reports?

For reports ending on or after 31 December 2024 (correct)

For reports ending on or before 31 December 2024

It has no specific effective date

For reports ending on or after 31 December 2023

Under Provision 8.1, what type of approach is the disclosure based on?

Comply-or-explain Signup and view all the answers

What details must be included in the breakdown of an executive's remuneration as stated in Listing Rule 1207(10D)?

Base salary, bonuses, and long-term incentives Signup and view all the answers

What is the primary definition of an independent director as per the Code of Corporate Governance?

A director without relationships that could interfere with business judgment. Signup and view all the answers

Which of the following is NOT a factor that disqualifies a director from being independent according to Listing Rule 210(5)(d)?

Being part of a shareholder rights committee. Signup and view all the answers

What must an independent director demonstrate according to Provision 2.1 of the Code?

Independence in conduct, character, and judgment. Signup and view all the answers

According to the Code of Corporate Governance, how many years can a director serve while still being deemed independent?

Nine years. Signup and view all the answers

What is one of the key areas addressed in the Code of Corporate Governance?

Enhanced disclosure of directors' remuneration. Signup and view all the answers

In the context of corporate governance, which is a principal responsibility of an independent director?

To assess and maintain independence in judgment. Signup and view all the answers

Which component is emphasized in the procedures for developing remuneration policies as outlined in the Code?

Alignment with shareholders' interests. Signup and view all the answers

What relationship could lead to a director not being considered independent?

Prior employment with a related corporation. Signup and view all the answers

What is the minimum requirement for the number of independent directors on a regular board?

At least 2 directors and 1/3 of the board Signup and view all the answers

Which committee is mandated by law according to Section 201B of the Companies Act?

Audit Committee Signup and view all the answers

According to Provision 10.2 of the Code, how many members are required in the Audit Committee?

At least 3 members Signup and view all the answers

What is the primary role of the Remuneration Committee according to Provision 6.1 of the Code?

Recommending a general framework of remuneration for the Board Signup and view all the answers

What is a requirement when the chairman of the board is not independent?

A Lead Independent Director must be appointed Signup and view all the answers

Which of the following is NOT a duty of the Audit Committee according to Provision 10.1 of the Code?

Determine the budget for marketing strategies Signup and view all the answers

What is the minimum representation for independent directors in the Remuneration Committee?

The majority must be independent Signup and view all the answers

According to Provision 4.2 of the Code, who may join the Nominating Committee?

The CEO or another executive director Signup and view all the answers

What is the required frequency for directors to submit themselves for re-nomination and re-appointment according to Listing Rule 720(5)?

Every 3 years Signup and view all the answers

What is a key duty of the Nominating Committee according to Provisions 4.1 and 4.4 of the Code?

Make recommendations on Board appointments and re-appointments Signup and view all the answers

What is the focus of Principle 8 of the Code of Corporate Governance?

Transparency on remuneration policies Signup and view all the answers

What does the Listing Rule 1207(10) require the Board to comment on in the Annual Report?

The adequacy and effectiveness of the issuer’s risk management Signup and view all the answers

Which of the following is a mandatory training requirement for directors with no prior experience according to Listing Rule 210(5)(a)?

Training in roles and responsibilities of a director Signup and view all the answers

Which of the following statements about the Audit Committee's composition is TRUE?

A majority of its members, including the chairman, should be independent Signup and view all the answers

Study Notes

Code of Corporate Governance Content

The Code is divided into 13 sections that cover Board Matters, Remuneration Matters, Accountability and Audit, Shareholder Rights and Engagement, and Managing Stakeholder Relationships
Each section contains provisions and practice guidance

Independent Directors

A director must be independent in conduct, character, and judgment
They should not have any relationships with the company or its affiliates that could interfere with their independent judgment
Listing Rule 210(5)(d) provides mandatory tests for disqualifying a director from being independent, including employment history with the company or its related companies within the past three financial years

Board Composition Requirements

Minimum Non-Executive Directors: A majority of the board must be Non-Executive Directors
Minimum Independent Directors: At least two independent directors are required, representing at least one-third of the board. If the chairman is not independent, a majority of the board must be independent directors.
Board Membership: New directors must undergo mandatory training
Re-nomination and Re-appointment: All directors must be re-nominated and re-appointed at least once every 3 years

Board Committees

The Audit Committee, Nominating Committee, and Remuneration Committee are required legal entities
Each committee must have written terms of reference that outline their authority and duties

Audit Committee

At least three non-executive directors must be members of the Audit Committee, with the majority of them (including the chairman) being independent directors.
At least two members, including the chairman, should have recent and relevant accounting or related financial management expertise or experience.
The AC is responsible for reviewing the adequacy, effectiveness, independence, scope, and results of the external audit and the internal audit function
They also review significant financial reporting issues, the adequacy and effectiveness of internal controls and risk management systems, and the whistle-blowing policy and arrangements.

Remuneration Committee

The Remuneration Committee (RC) recommends to the Board a general framework of remuneration for the Board and key management personnel and recommends the specific remuneration packages for each director and key management personnel.
The RC must consist of at least three directors, all of whom must be non-executive, and the majority of whom (including the chairman) must be independent

Nominating Committee

The NC must consist of at least three directors, with the majority of them (including the chairman) being independent directors.
The CEO or another executive director can be a member of the NC, and the lead independent director should be a member
The NC makes recommendations to the Board on all Board appointments and re-appointments, determines annually if a director is independent, and reviews the process and criteria for evaluation of the performance of the Board and directors.

Risk Management and Internal Controls

The Board must consider establishing a Board Risk Committee to assist in determining the nature and extent of significant risks the company is willing to take in achieving its strategic objectives
The Board must also comment on the adequacy and effectiveness of the company’s risk management and internal control systems, with the concurrence of the Audit Committee

Enhanced Disclosure of Remuneration

The company must disclose in its annual report the policy and criteria for setting remuneration, as well as the names, amounts, and breakdown of remuneration of at least the top five key management personnel in bands no wider than S$250,000.
Listing Rule 1207(10D) requires mandatory disclosure of the names, amounts, and breakdown of remuneration paid to each individual director and the CEO by the issuer and its subsidiaries
The breakdown must include (in percentage terms) base or fixed salary, variable or performance-related income or bonuses, benefits in kind, stock options granted, share-based incentives and awards, and other long-term incentives
Listing Rule 1207(10D) is effective for annual reports prepared for the financial years ending on or after 31 December 2024.

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