Board directors John Lim and Alexandra Schaapveld on Corporate Governance

Summary

This transcript explores the evolving challenges faced by corporate boards globally, including shareholder activism, regulatory pressures, and family-owned enterprises navigating succession issues. Key topics include the growing emphasis on board transparency, the role of independent directors, and the importance of diversity in enhancing board effectiveness. The conversation also highlights the increasing participation of women on corporate boards, particularly in Asia, and the implications of shareholder activism on corporate governance. The benefits of strong corporate governance codes and their relevance in guiding companies toward best practices are also discussed, with a focus on transparency and accountability.

Takeaways

• 😀 Globalization is presenting unprecedented challenges to corporate boards, including new regulations and shareholder activism.
• 😀 Boards are facing increasing pressure to improve transparency and emphasize the importance of independent directors.
• 😀 Accountability is a growing public debate, with boards now being held responsible not just by shareholders but also by the public and consumers.
• 😀 Boards are encouraged to build sustainable business models that focus on society, employees, and clients, alongside traditional shareholder interests.
• 😀 Board diversity is recognized as a key driver of better decision-making, with diverse skill sets, cultures, and experiences strengthening the collective board performance.
• 😀 Gender diversity on boards is gaining attention, especially in Europe, but Asia is still lagging in terms of female representation.
• 😀 There is a growing push for greater female participation on boards in Asia, driven by both societal and corporate changes.
• 😀 The low percentage of women on corporate boards in regions like Singapore (7.3%) highlights the need for conscious efforts to increase female representation.
• 😀 Shareholder activism is increasing, and boards need to regularly review external factors like regulation, shareholder behavior, and market trends to navigate these pressures effectively.
• 😀 Codes of corporate governance provide guidelines for best practices, but they are not mandatory; regulatory requirements focus on protecting shareholder rights and ensuring compliance.

Q & A

What challenges are corporate boards facing globally?

Corporate boards are facing unprecedented challenges, such as new regulations, increasing shareholder activism, and the need to address issues like transparency and the involvement of independent directors.

How can boards effectively handle increasing shareholder activism?

Boards can address shareholder activism by ensuring better transparency and accountability. It’s important to regularly review external factors like shareholder dynamics, family ownership, regulations, and taxes that influence the company.

What is the role of independent directors in modern corporate governance?

Independent directors play a critical role in maintaining transparency and ensuring accountability. They provide an outside perspective that helps mitigate potential conflicts of interest and strengthen board decision-making.

Why is sustainability becoming more important for companies worldwide?

Sustainability is crucial because it helps companies maintain their 'license to operate.' Businesses are increasingly required to consider not just shareholders, but also employees, clients, and society at large, ensuring long-term viability and responsibility.

How does board diversity impact company performance?

Board diversity brings together a variety of skills, experiences, and perspectives, which can lead to better decision-making. Diverse boards are less likely to fall into groupthink and are more capable of navigating complex challenges.

What is the current state of gender diversity on corporate boards in Asia?

Gender diversity on corporate boards in Asia lags behind Europe and the U.S., but there is growing awareness and push for greater female participation. In Singapore, women make up only 7.3% of board members in listed companies.

What steps need to be taken to improve the representation of women on corporate boards in Asia?

To increase female representation on boards, companies need to ensure a supply of competent women from the executive ranks. Additionally, there should be a conscious effort to address the gender disparity by promoting women into leadership positions.

How does the trend of shareholder activism affect board effectiveness?

Shareholder activism challenges boards to become more responsive and accountable. It forces boards to regularly assess external pressures, like shareholder expectations and regulatory changes, to remain effective and aligned with stakeholders' interests.

What is the role of corporate governance codes in shaping business practices?

Corporate governance codes provide guidelines for best practices, focusing on transparency, accountability, and shareholder rights. These codes are not mandatory but are important for improving corporate governance and ensuring companies adhere to ethical standards.

What are the benefits of the Singapore Corporate Governance Code?

The Singapore Corporate Governance Code promotes independent directorships, enhances director training, and sets guidelines for disclosure, remuneration, and risk management, which helps businesses maintain high standards of governance and accountability.