The Role of the Board in the Governance of the Company

1. The Role of the Boardin the Governance of the Company OECD Roundtable on Corporate Governance Koh Boon Hwee 4 April 2001

2. Factors impacting Governance • Corporate legal framework • Disclosure standards • Activism of institutional shareholders • Market for corporate control • Financial media and analysts • Civil recourse for shareholders

3. The Board is the Key • Good Governance cannot be imposed from the outside • It must come also from within • Hence the board, at the apex of a company’s corporate governance structure, is the key

4. Asian Boards • Founding families still in control of management • External governance mechanisms are relatively weak • Cultural attitude towards management role

5. Key Roles of the Asian Board • Maintaining a process for self renewal that ensures continuing independence • Reviewing succession plans and compensation plans for management • Scrutinizing related party transactions or the way projects are directed to private enterprises.

6. Government sets the framework • Change comes only when there is some impetus • Only government can lay the foundation

7. Striking a balance • Strategy and oversight vs Operations and details • Form vs Substance • Conformance vs Performance

8. Conclusion • No hard evidence to link corporate governance to corporate performance • Plenty of hard evidence to show that investors will pay more for companies that have good governance • The key institution for good governance is the Board • The Board is only as good as the people who form it,