Overview
IntroductionThe NCCG, 2018, and the United Kingdom Code, amongst others, have recognised the status of the board of directors as the centre of Corporate Governance and the highest governing body of a company. As the highest body responsible for ensuring a company’s sustainability and improved performance, it is important to put in place mechanisms to ensure that the board carries out its duties effectively and efficiently. The effectiveness and efficiency of the board start from the selection and appointment process of the directors, leading to questions such as how the directors are appointed. Who are the appointed directors?
After the appointment, are they properly inducted into the board?
Are the directors given regular training?
How does the board meet, and what discussions take place during the meetings?
Is the board regularly evaluated?
How are evaluations conducted?
Furthermore, the board is expected to delegate some of its responsibilities without abdicating them. This final part of the ‘Mind the Board Series’ will, in addition to exploring the recommended practices for board effectiveness, discuss board committees as essential machinery for board effectiveness. Board Selection and Appointment ProcessBefore a company is incorporated, the promoters are typically responsible for appointing the first directors. However, upon the company's incorporation, the members may re-elect or reject the first directors and appoint new ones at the annual general meeting. Furthermore, the appointment of a director may also be to fill any casual vacancy arising out of death, resignation, retirement, or removal.
Irrespective of the reason for the appointment, it is important to ensure that the process for the selection and appointment of directors is transparent and well-structured, as this is capable of affecting an otherwise effective board.
