28 April 2022
On 25 March 2022, the Monetary Authority of Singapore (“MAS”) issued an updated set of the Practice Guidance in the Code of Corporate Governance, providing updated guidance on a company’s board diversity policy.
Effective 1 January 2022, the Listing Rules of the Singapore Exchange Securities Trading Limited (SGX-ST) ask that issuers maintain a board diversity policy that minimally addresses gender, skills and experience. Boards may incorporate other aspects of diversity as are relevant for the company.
The revised Practice Guidance provides that the Nominating Committee, which is responsible for setting the board diversity policy (including the targets, plans and timelines) for the board’s approval, should review the progress towards meeting the policy targets and keep the board updated.
The board diversity policy should have measurable numerical or quantitative targets to be achieved within an appropriate timeline (e.g. specific numerical targets for female board representation within a specified time period). The accompanying plans for achieving the targets should describe the concrete steps that the company will undertake. While aspirational or qualitative targets (e.g. “creating an inclusive culture”) may also be included, these should also be accompanied with a description of the initiatives to be undertaken to translate the aspiration into results.
The revised Practice Guidance also states that companies should provide updates on their progress toward their targets by stating what they achieved within the year under report and what is to be achieved beyond the year under report. Companies that face challenges in meeting their stated targets within the relevant timelines should provide an explanation and describe their plans to overcome these challenges. Companies should strive to build on their achievements each year and may consider disclosing how their performance relative to their targets has changed over the years.
In addition, the description of how the board’s combination of skills, talents, experience and diversity serves the needs and plans of the company should be made in the context of the company’s current plans and future strategy.