I APPLAUD the recent launch of the revamped Governance and Transparency Index by The Business Times and the Corporate Governance & Financial Reporting Centre.

It is a timely move, given a recent slew of cases of corporate fraud and the governance issues they exposed.

The cornerstone of an effective corporate-governance structure is an effective and independent board.

Director independence, or the lack of it, could make or break a well-managed, profitable company.

Good corporate governance requires competent and committed independent directors (IDs).

Complaints of an old boys' network of CEOs and a limited pool of competent IDs are rife. In Asia, and particularly in Singapore, directors fall into two groups.

The first group comprises executive directors and non-executive directors.

These individuals are controlling shareholders, substantial shareholders and/or their associates or nominees.

The second group consists of IDs and non-executive directors who have no association with the first group mentioned above.

Usually, the first group of directors will shortlist and recommend members from the second group for election to the board.

I suggest amending the rules so that the election of IDs and/or members from the second group is done at a general meeting attended only by minority shareholders.

The minority shareholders can exercise their rights to ensure only the ablest and most competent independent and non-executive directors get on the board.

Another suggestion is to tap the ranks of the Singapore Institute of Directors (SID).

Established in 1998 after the Asian financial crisis, the SID has grown into a 1,200-member organisation.

They have a pool of qualified, competent and committed directors, including professional IDs.

SID could develop programmes to register and accredit competent IDs who aspire to serve on the boards of listed companies.

It can also issue statements on whether IDs who sit on multiple boards are able to discharge their duties before awarding accreditation. Alternatively, IDs could be accredited by SID before companies can nominate them for board positions.

While I believe SID has the resources for such a programme, it is reasonable for companies to pay a fee for this service.

The fee will be worthwhile if accreditation enhances governance and transparency in companies.

Mr Ee Teck Siew

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