1. Roles and responsibilities of the Board
The Board is
required to formalise ethical standard through a code of conduct and ensure
that organisation strategies promote sustainability. It is also expected to
formalise a Board charter.
- Is timely information provided to the Board of sufficient depth and quality to facilitate a robust Board discussion on the risks and benefits of a particular proposal?
- Has the Board spent enough time on areas of particular concern to stakeholders, including strategy and succession planning?
- How satisfied are you with the frequency and depth of the Board’s re-evaluation of the continued viability of the organisation’s strategy?
- Do you know the organisation’s ethical values? How effective is the organisation’s code of conduct in encapsulating such values?
- Do you know the operational, reputational and commercial risks and opportunities faced by the organisation regarding sustainability? How does the organisation benchmark with its peers?
- Has your CEO developed a sustainability strategy that is aligned to the organisation’s corporate ambitious? Has your CFO robustly and transparently reported the organisation’s sustainability activity?
2. Composition of the Board
The Board should establish a Nominating Committee,
chaired by a Senior Independent Director, who is responsible in overseeing the
selection and assessment of Directors. The Nominating Committee is charged with
developing a set of criteria including policies formalizing its approach to
diversity of the Board.
- Does the composition of the Board comprise independent-minded individuals who ask relevant and challenging questions in Boardroom discussion?
- Is the Nominating Committee effective in establishing a Board with a balance of needed skills and diversity of views?
- What are the impediments affecting the Board’s ability to add Directors with certain skill sets/attributes (e.g. international, technology, financial, legal, accounting, marketing expertise)?
- What are the resources (both internal and external) available to the Nominating committee to assist them in performing their duties more effectively? Examples would be the use of an industry-led independent Directors registries or a recruitment specialist.
3. Independence of Independent
Directors
The tenure of independent Directors is capped to a
cumulative period of nine years unless approved by the shareholders. Upon
completion of the nine years, such Directors can be re-designated as
non-independent Directors.
In addition, the positions of Chairman and CEO should be held by
different individuals. If the Chairman is not an independent Director, the
Board should comprise a majority of independent Directors.
- Has the Board formulated a policy on the terms of service of independent Directors
- Has the Board considered whether there is a potential conflict of interest when the roles of Chairman and CEO are combined?
- Has the Board considered whether there is an appropriate balance of power between the CEO and the independent Board members
4. Remuneration of Directors
The Board should establish formal and transparent remuneration policies
and procedures to attract and retain Directors. A Remuneration Committee can
perform this function.
- How did your Board conduct the annual Board evaluation process this year?
- How satisfied are you with the Board’s annual evaluation process? Is this conducted through self-assessment or by more objective measurements?
- Is the Directors’ remuneration made at the appropriate level to attract the right caliber and required expertise to the Board?
- Are the benefits sufficiently defined and appropriate for the role and responsibility of the Directors, and is there a difference between executive and non-executive Directors?
5. Risk management framework and
internal controls system
The Board is required to establish a sound framework to determine the organisation’s level of risk tolerance and actively identify,
assess and monitor key business risks.
- Has the Board considered how risk integrates with the Company’s overall strategy as part of its responsibility for overseeing risk?
- With many organizations increasingly expanding overseas, does the Board know enough and understand the risks of operating in foreign countries (e.g. regulatory, political and cultural risks)?
- How does the Board oversee major risks, such as risks relating to tax, regulatory, legal and information technology matters?
- How comfortable is the Board with the level of monitoring on the strategic risks identified?
6. Integrity of financial reporting
The Audit Committee should ensure financial statements
comply with applicable financial reporting standards.
- How confident are you with the reliability of the organisation’s financial reporting processes? What was the level of audit adjustments or issues in the past?
- What is the degree of manual work employed in preparing management and financial reporting?
- How reliant is management on the auditors for technical support and accounts preparation? Is the Board being kept up-to-date by Management on key developments in financial reporting?
- Are financial numbers reliable, accurate and timely? How long does it take for management to close the financial reporting books?
- Does the organization have sufficient IFRS knowledge and resources (both internal and external) to facilitate accurate financial reporting and strategic decision-making?
- What is the succession plan for the CFO and key members of the Finance team?
