I REFER to the report, 'Corporate governance issues get an airing' (BT, June 28). Many companies implement corporate governance regulations only in form but not in terms of actual spirit and substance.

I just wonder how effective Prof Mak Yuen Teen's suggestion is - as cited in the report, that investors at the initial public offer stage put more pressure on companies to be more open about recruiting independent directors.

If the company going for an IPO is expected to be a goldmine, would the above issue be even a remote concern on the minds of investors, including institutional investors?

Because, at this stage, their primary focus is to get a piece of the action.

Likewise, the other issue is whether directors who serve on many boards have sufficient time to discharge their responsibilities. Again, the suggestion places the onus on shareholders to question the directors.

What happens if the directors claim that they have plenty of time? For sure, they are not going to tell everyone that they are there for the money or to build up business networks.

Every investor knows that controlling shareholders, if they want to, have the power to push through their pet programmes with impunity, the presence of independent directors notwithstanding, because they have packed the board with their friends or relatives.

The saga currently underway at Yellow Pages is rather rare - it's only once in a blue moon that independent directors will take an active role in rejecting the wishes of the major shareholders.

Not many independent directors have the gumption to stomach such a public 'fight'.

To improve transparency of corporate governance in these two areas, the Monetary Authority of Singapore/Singapore Exchange should take a stand and impose certain basic guidelines:

- An independent director should not be related to controlling shareholders; definition of 'related' should follow that of the Companies Act;

- A director should be permitted to serve on the board of a maximum of six companies;

- A person appointed or re-appointed as a director signs a declaration that he has read, and is fully aware of his responsibilities as a director and that he may be liable for financial restitution if found to be amiss in performing his duties;

- Minutes of meetings, including disagreements, be posted on SGX website and made available at AGMs; and

- Shareholders be permitted under Singapore law to take class action, not only against the board of directors, executive directors, but also the controlling shareholders in civil courts to redress wrongdoings.

Foo Kok Jong
Singapore

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