Director Training and The Role of The Institute of Directors

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Policy Dialogue on Corporate Governance in China

• Director Training and The Role of The Institute
  of Directors
• The Singapore Experience
• Presented by John K M Lim
• President
• Singapore Institute of Directors
• Shanghai, China
• 25 26 February 2004

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Director Training and The Role of The Institute
  of Directors
• Why the need for director training and
  development ?
• What have we done to date ?
• Where do we go from here ?

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Singapore Institute of Directors
• founded in July 1998
• National association for company directors in
  Singapore
• Governed by a council headed by a Chairman and a
  President
• Key roles are
• To act as a forum for exchange of information on
  issues relating to corporate governance and
  directorship in Singapore
• To organise and conduct professional training
  courses and seminars to meet the continuing needs
  of its members and company directors
• To regularly publish newsletters, magazines and
  other publications to update members on relevant
  issues and developments
• To be responsible for the discipline of members

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Singapore Institute of Directors
• Mission Statement
• To promote the professional development of
  directors and corporate leaders and encourage the
  highest standards of corporate governance and
  ethical conduct

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Only organisation to provide comprehensive
  focused director development programme
• Works in collaboration with other professional
  bodies, institutes of higher learning and
  regulatory/government agencies
• Has more than 1200 members of which 3 are
  Affiliates
• Has pivotal role in director training in Singapore

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• The Need For Sound Corporate
• Governance
• Development of Singapore as a leading global
  financial and business hub dictates it must
  develop, adopt and promote international best
  practices in corporate governance among its
  companies
• Institutional investors, both local and
  international, have clearly indicated importance
  of good corporate governance in their investment
  decisions

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• The Need For Director Training and
• Development
• Board is apex body collectively responsible for
  corporate governance and success of company
• Effective board is central to good governance
• Skills, knowledge, mix and independence of
  directors central to board effectiveness

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Increasing demands on boards and individual
  directors
• Board committees
• Investor activism
• Skills/knowledge levels among directors and
  standards of corporate governance among listed
  companies vary considerably
• Concerns on director skills and independence
• Complaince in form vs complaince in substance
• High level of transparency and disclosure not
  synonymous with management practices of
  smaller/family dominated companies

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Features of an Effective Board
• Have relevant collective skills, knowledge and
  experience
• Can work cohesively as a team
• Have sufficient degree of independence and
  integrity
• Are prepared to devote sufficient time and
  resources to the affairs of the company
• Can provide the strategic and entrepreneurial
  leadership to the company

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Have a comprehensive and formal director
  induction programme
• Have a programme of continuing professional
  development for directors
• Have formal board performance evaluation and
  individual director appraisal
• Have well defined plans and processes for board
  succession

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Continuing director development and training
  essential for improved board performance
• Most effective if combined with proper selection
  and formal board performance evaluation
• Institutes of directors must play lead role in
  promoting and implementing director development
• Development programme can consist of both formal
  and informal sessions
• Programme must meet needs of different categories
  of directors

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• SID has been conducting training for directors
  since September 1999
• Company Directors Course comprising 4 modules
  of 2 days each form the foundation. To date SID
  has conducted 52 modules and trained more than
  800 directors and prospective directors
• Half/full day workshops on specific topics
  supplement core programme
• Directors handbook and national surveys
• Programmes implemented in partnership with other
  professional bodies, institutes of higher
  learning and regulatory agencies

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• The SID Company Directors Course
• The Company Directors Course aims to provide the
• foundations for directors and would-be directors
  to
• understand their responsibilities, hone their
  skills
• and learn new knowledge to improve their
  practices. This
• will protect directors of the statutory and moral
  liabilities,
• and enhance their performance as leaders of their
  
• organisations. The course comprises 4 modules,
  each of
• two-day duration

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Module 1 The Company and Corporate Directorship
• This module provides delegates a firm
  understanding of the
• company as a business entity, and how it
  functions as one.
• It covers key roles and responsibilities of
  directors, and
• potential pitfalls in corporate directorship with
  regards to
• their liabilities. It serves as a foundation for
  future
• modules in more complicated aspects of corporate
• regulation, administration and finance.

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Module 2 Getting the Best from Your Board
• This module discusses the structure of the board,
  how it is
• organised, and the special duties of the Audit
  Committee.
• It introduces the various components of a
  directors duties,
• and how he or she can be effective in the
  boardroom and
• yet remain independent. The Chairmans role and
  his
• relationship with the CEO and the board are also
  covered
• as well as special situations.

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Module 3 Strategic Management Concepts
• Techniques
• This module gives an overview of Strategic
  Management
• including frameworks for conducting industry
  analysis,
• setting competitive strategy and building core
• competencies. It discusses strategic planning
  models and
• how a company can constantly produce effective
• strategies.

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Module 4 Finance for Directors
• This module covers responsibilities of directors
  pertaining
• to disclosures in financial statements from both
  the legal
• and best practice standpoints. It provides
  delegates who
• are not trained in finance an understanding of
  financial
• analysis, risk assessment and management and
  capital cost
• and investment so as to allow them to contribute
• meaningfully in boardroom discussions.
  Individuals with
• financial qualifications and experience may be
  exempted
• from module 4 Finance for Directors. The SID
  reserves
• the rights to grant this exemption.

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Current Status of Director Training in Singapore
• Director training not mandatory
• Director training still not an established
  practice in listed companies
• SID Board of Directors Survey in 2002 of listed
  companies revealed that out of 120 respondents
• Only 22 sent their NEDs for training
• 13 or more than half of the 22 indicated their
  NEDs received between1 and 4 hours of training
• 4 received between 5 and 8 hours
• 5 received more than 8 hours training in the
  past year

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Challenges
• Greater participation from companies across the
  board
• Programme to include greater emphasis on
  practical skills development
• Provide sufficient mix of programmes to
  accommodate differing needs
• Greater formal recognition of director training
  by regulatory agencies

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Key Thrusts 2004 / 2005
• Implement a formal comprehensive programme for
  continuing director development
• Foundation programme
• Practice oriented series
• Residential programme
• Directors round table
• Directors update service

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Foundation Programme
• Update of current company directors course
• Introduction of Q A panel
• New 1 day course on key essentials for new
  directors

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Practice Oriented Series
• Half day/full day practical workshops designed to
  improve directors implementation skills and
  effectiveness
• Emphasis on process instead of structure

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Residential Programmes
• 3 to 5 day programmes conducted semi-annually
• Emphasis on sharing, case studies, net working
• Regional participation
• 1st programme in July 04 conducted jointly with
  corporate governance and financial reporting
  centre, NUS

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Directors Round Table
• Once per quarter
• Forum for discussion on issues affecting
  directors
• Exclusive to SID members and invited guests

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Directors Update Service
• Designed to provide directors with timely updates
  on changes/proposed changes in legislation
  affecting directors and developments in global
  best practices in corporate governance
• Annual board of directors survey

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Key Thrusts 2004 / 2005
• Introduce criteria and procedure for director
  assessment
• Introduce as part of best practice for all new
  directors of listed companies to attend training
  and for annual disclosure by companies on
  director training
• Extend collaboratoin with existing and new
  partners, including IoD UK

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Policy Dialogue on Corporate Governance in China
Shanghai, China 25 26 February 2004

• Thank you