Corporate Governance – Committees
The nominating committee is responsible to identify, nominate and orientate new directors, both executive and non-executive. The main reason for delegating such responsibility is to ensure recruitment matters relating to directors are addressed in detail, allowing the Board to spend time on strategic matters. It is, however, the Board’s responsibility to appoint a candidate to be a director.
General duties and responsibilities
- Recommend candidacy for directorship filled by shareholders, taking into consideration their knowledge, skills, experience, expertise, professionalism, integrity etc;
- Assist the Board to review the required mix of skills, experiences and other qualities which non-executive directors should bring to the Board on annual basis;
- Consider recommendations of candidates proposed by the CEO or other senior management or shareholders or directors;
- Review annually, the effectiveness and contribution of the Board, each committee and each individual director; and
- Review periodically, and report to the Board on succession planning, and to evaluate potential successors.
Additional tasks of the Nominating Committee, subject to approval of the Board, can be as follows:-
- Assess the optimal balance for Board membership;
- Assess the desirable number of independent directors; and
- Consider possible representation of interest groups.
According to the Corporate Governance Code, the Nominating Committee should comprise wholly non-executive directors with a majority as independent. These persons are expected to be outspoken and frank.
There should also be rotating membership in the committee where all members are appointed for a fixed term of service. This is required to avoid complacency in the committee thereby affecting a drop in the committee’s performance.
The main purpose of a Remuneration Committee is to ensure a proper balance between having a remuneration package that can attract and retain good directors, and not paying excessively.
Recommendation from Corporate Governance Code, this committee should be made up of wholly or mainly of non-executive directors. It also calls for the Board to disclose the committee membership in the directors’ report.
Same as the Nominating Committee, this Remuneration Committee should also appoint its members on rotation basis.