Tenure limit for independent directors of listed companies

1 March 2023|In Legal Updates

On 11 January 2023, Singapore Exchange Regulation (“SGX RegCo”) announced changes to the Listing Rules to limit the tenure of independent directors (“IDs”) serving on the boards of listed companies to nine (9) years. Prior to the changes to the Listing Rules, IDs could serve on the boards of listed companies for more than nine (9) years if his or her independence was confirmed by a two-tier voting mechanism.

The two-tier voting mechanism was removed on 11 January 2023. As transition, an ID whose tenure exceeds the nine-year limit and has had his or her independence confirmed by the two-tier voting mechanism may continue to serve as an ID until the listed company’s annual general meeting (“AGM”) held for the financial year ending on or after 31 December 2023.

SGX has issued a reminder to listed companies to consider the nine-year limit early in their succession planning and on a continuing basis. SGX RegCo has stated that it will not grant extensions to the deadline to meet the new Listing Rule requirement, given that ample notice has been given to listed companies to ensure orderly renewal of the board.

SGX RegCo further encourages nominating committees of listed companies to expand their search process to consider candidates who can provide diverse experience and perspectives to the board that are relevant to the listed company’s current plans and future strategy.

Listed companies may also tap on the resources and/or services provided by organisations such as the Council for Board Diversity, the Singapore Institute of Directors (“SID”), and relevant professional associations to facilitate their search for new IDs.

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