“Director Training and The Role of The Institute of Directors” The Singapore Experience

1. 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

2. 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 ?

3. 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

4. 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”

5. 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

6. 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

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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 :

14. 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.

15. 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 director’s duties, and how he or she can be effective in the boardroom and yet remain independent. The Chairman’s role and his relationship with the CEO and the board are also covered as well as special situations.

16. 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.

17. 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.

18. 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

19. 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

20. 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

21. 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

22. 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

23. 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

24. 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

25. 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

26. 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

27. Policy Dialogue on Corporate Governance in China Shanghai, China 25 – 26 February 2004 Thank you