The Financial Services Commission has issued a Circular Letter on 28 March 2013 to remind directors of their duties and obligations under the law. In fact, the directors are notified that upon providing their consent to act as director on a particular entity, they are confirming to adhere to all the laws and regulations under the Companies Act 2001. As such, under Section 143(1) of the Companies Act 2001, the directors are required to act in good faith and in the best interests of the company.
As major administrator of the company, a director shall always act in accordance with the law, and shall always exercise his duty with due care and honesty. Directors should also ensure that they do not put themselves in a position that will impair their ability to perform their functions properly.
The attention of the directors is also drawn to clause 2.7.8 of the Code of Corporate Governance, whereby the former should carry out their responsibilities diligently and they should also get their hands on the business. In addition, under clause 1.8 of the same code, the Financial Services Commission has the right to monitor and to keep close eyes on directors not adhering to the laws and to take the requisite action accordingly.
The Financial Services Commission has the right to consider whether the current directors or propose directors have the capacity and are/will be able to perform their duties in accordance with the law based on the following criteria:
- Qualification and experience: a director shall have the relevant qualification and experience to exercise sufficient care, diligence and skills for the good conduct of the business;
- Independence of mind: a director shall act with integrity and freedom of mind, without any influence, interest or relationship that might impair his professional judgment or objectivity;
- Judgment: a director shall be able to provide impartial and good judgment while excising his function.
- Time Commitment: when a director serves on multiple boards, he shall ensure that sufficient time and attention is given to the affairs of each board he serves on. The director shall be adequately involved in the control and management of the company and shall perform his functions properly and efficiently.
It is expected that a director shall be able to demonstrate that he is and will be able to devote sufficient time to:
- adequately prepare for each board meeting;
- attend each board meeting including the annual general meeting;
- address the complexities and risks involved;
- actively participate in deliberations of the board meetings;
- adequately prepare for any board committee and can actively participate in the deliberations of the committee(s);
- be acquainted with the affairs and business of each licensee; and
- fulfill all his obligations and responsibilities in accordance with the requirements set out in the Companies Act 2001.
The following might be useful in assessing the time commitment:
- The number of working hours available for preparing and attending board meeting;
- The availability of support staff;
- The frequency of board meetings;
- The size and complexity of the business;
- Other ancillary factors;