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 companys
  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,