Presentation slides prepared by AsianDirectors for the 8th ABF Corporate Governance Asia Conference held in Singapore on the 21st-22nd June 2010

1. By Firdaus Salim - Managing Director, AsianDirectors Pte Ltd
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

2. » Utilising Technology to facilitate Corporate Governance Data Mining
» AsianDirectors LIVE platform enables NC to streamline
candidate appointment process
» Over 7,000 candidates with as many as 15 data points per
profile
Human Driven
» PLCs, Private Equity, Corporate Secretarial Firms, IPO
Listees, Investment Banks
Talent Platform
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

3. Introduction • INED Definition
to INEDs • INED Responsibilities
• Shareholder Trends
Trend • Regulator Trends
Analysis • Board Trends
Conclusion • Q & A
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

4. Definition of INED?
» Independent Non-Executive Director: Director who is free from management
influence and acts as a supervisory principal to senior management
Roles and Responsibilities?
» Key Areas of Contribution: Constructively challenge and help develop
proposals on strategy & review the performance of management in meeting
agreed goals and objectives and monitor the reporting of performance
However, INEDs are required to play myriad roles in today’s volatile environment
Risk Management Pay for Performance Succession
Planning Stakeholder Engagement
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

5. Country Composition Independence?
• Not employed by Co for past 3 years
• Family member - Senior executive for past 3 years
• Receiving compensation other than dir fees for
Singapore
o At least one-third past 1 year (incl: family member)
(2005) • 5% or more stake in Co and/or Business dealings
worth $200K (incl: family member)
o At least one-third • ot employed by Co for past 2 years
N
• Family member – no timeframe but more
o Should include a number of
prescriptive (spouse, parent, bro, sis, child)
Malaysia directors which fairly reflects the • Not acting as nominee of exec and/or majority S/H
(2007) investment in the company by • No business transactions past 2 years worth RM250K
shareholders other than the • Not engaged as a professional advisor
significant shareholder
o No numerical indicator • Independent Commissioner = who are not
o One of the Independent originated from an affiliated party
• Affiliated Commissioners = having business and
Commissioner shall have an
Indonesia family relations with the controlling shareholders,
accounting or finance background Board of Directors, Board of Commissioners, and with
(2006) the company itself
• Former affiliated members = shall for a certain
period of time, be considered as affiliated
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

6. Shareholder Regulator Board
Shareholder Regulatory
Board Trend
Trend Trend
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

7. Shareholder Regulator Board
1
One Share – One Vote:
» Poll Voting vs Show of Hands – Reinforcing transparency and accountability
» Institutional Investor’s Impact on Poll Voting – Reduces minority power
» Dual Class Share System – Seeking public capital & limiting dilution?
2
Privatisations and Delisting:
» Minority S/H Protection – Victim of majority vote?
» Exit Price – Fair valuation of the delisted company
» Legal Channels? – Companies Act vs Listing Rules
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

8. Shareholder Regulator Board
3
Disclosure of Information
» Quarterly Reporting – Room for improvement in most Asian markets
» Depth and Breadth of Disclosure – Detailed compensation info, Board processes ?
» “Action speaks louder than words”– Disclosure mismatches
Example of usual remuneration
disclosure practices in Singapore
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

9. Shareholder Regulator Board
Case Study
Singapore Exchange - Electronic Poll Voting
o Electronic Voting to steer voting towards a one-share, one vote system
rather than a “show of hands”
o SGX shareholders were provided with handsets and smart cards at
registration, linking voting rights to their shareholdings based on the size
and class of their holdings.
o Votes for each resolution were recorded instantly - and the results were
displayed immediately on a screen for all shareholders.
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

10. Shareholder Regulator Board
Case Study
Disclosure Discrepancies – Englotech Bhd
What was said
“The board believes that the investing public and shareholders should be kept
informed of all material business matters, which may influence and affect the group.
Timely release of information on the group’s performance and major developments
via appropriate channels of communication provides the shareholders and investors
with an overview of the group’s operation.”
– Annual Report 2008
What has happened
Although it had been delisted in February 2010, Englotechs was publicly
reprimanded by Bursa Malaysia for several breaches of the exchange’s listing
requirements, one of which was its failure to make an immediate announcement of
the defaults in payment of credit facilities by the two subsidiaries. Three of the
company’s directors were fined RM113,050.
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

11. Shareholder Regulator Board
1
Regulatory Change vis-à-vis CG codes:
» Code of Governance – Tightened up post financial crisis.
» Redefinition of Independence Regulations - Higher % of INEDs on Corp Board
2
IPO Listings
» Listing Rules – Listing rules tweaked to ensure easier access for quality foreign
IPO listings
» Secondary Listings – Exchanges are providing secondary listing access to
companies
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

12. Shareholder Regulator Board
3
Securities Law
» Minority S/H and Company Delisting Regulatory change to provide increased
power to minority shareholders in events of delisting and privatisation
» Insider Trading – Preventive measures stepped up
4
Regulatory Philosophy Moving Forward
Country Approach Response
Hong Kong Enforcement Fines
Singapore Stricter Code + Market Awareness Review of code + Public Disclosure
Malaysia Stricter Code + Enforcement Review of Code + Fines
Philippines Incentives Public Awareness of good firms
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

13. Shareholder Regulator Board
Case Study
Maharlika Board- CG Incentives in Philippines
o Philippine Stock Exchange (PSE) has approved the draft listing rules for a
new index, aimed to distinguish public companies which voluntarily adhere
to higher corporate governance standards
o The proposed criteria for listing in this segment include a minimum float of
30 percent and an increased number of independent directors to three, as
compared with the minimum of two independent directors as provided in
the existing law
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

14. Shareholder Regulator Board
1
Board Composition
» INED Recruitment Process – Process of recruitment is just as important as quality of
candidates, reduces inherent reputational risk of INEDs should company face
trouble
» Time Commitment – A cap on multiple directorships? + Committee Diversity
2
Liquidity and Cash Flow Issues
» Tremors from Financial Crisis – liquidity a critical issue for many organizations to
manage and has quickly elevated issues of cash flow and liquidity to the agendas
of many corporate boards
» The Audit Committee’s new responsibilities – Cash flow, short-term obligations,
contingent liabilities and the health of formerly reliable suppliers
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

15. Shareholder Regulator Board
3
Risk Management
» Setting the tone at the top – Define organisation risk appetite appropriately and to
manage the risk effectively
» Risk Committee – Prevalent in Bluechips, board to be cognizant of principal risks
4
Compensation Matters
» Pay for Performance + Pay for Prudence ? – Trends point towards compensation
being aligned with prudent risk-taking
» Say on Pay – Effective supervisory oversight and engagement with stakeholders
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

16. Shareholder Regulator Board
Case Study
How INED appointment process matters – NEL Holdings
o SGX publicly reprimanded NEL and its directors for dragging their feet on
releasing a special auditors' report to shareholders - and asked all listed
companies to consult the Exchange before engaging any of NEL's Directors
o The two independent directors based in Singapore were appointed only
after E&Y had been appointed NEL's special auditor to investigate possible
‘round-tripping’ deals
o They have received no form of monetary or non-monetary compensation,
direct or indirect, for the work they have been doing
o Presence of INED appointment process will add more credence to their
case
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference

17. Full Research Paper can be downloaded from
www.asiandirectors.com
• Q&A
AsianDirectors Presentation: 2010 ABF Corporate Governance Asia Conference