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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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slide1

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

slide2

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 ?
slide3

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
slide4

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”

slide5

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
slide6

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
slide7

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
slide8

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
slide9

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
slide10

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
slide11

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
slide12

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
slide13

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 :

slide14

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.

slide15

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.

slide16

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.

slide17

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.

slide18

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
slide19

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
slide20

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
slide21

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
slide22

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
slide23

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
slide24

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
slide25

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
slide26

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
slide27

Policy Dialogue on Corporate Governance in China

Shanghai, China

25 – 26 February 2004

Thank you