INDEPENDENT DIRECTORS IN ASIA PACIFIC

REGULATIONS AND PRACTICE IN SELECTED MARKETS

Board independence is the cornerstone of good corporate governance. What factors determine a director's independence? How many independent directors make for an effective board? Can independent boards prevent corporate scandals?

In this report, CFA Institute documents regulations, best practices, and case studies in Australia, Hong Kong SAR, India, Japan, Malaysia, and Singapore.

Punita Kumar-Sinha PhD, CFA and Paul Andrews, give their views on the importance of independent directors, who this issue is relevant to, and what to expect from the report.

Punita Kumar-Sinha PhD, CFA
CFA Institute Board of Governors

Paul Andrews,
Managing Director, Research, Advocacy and Standards, CFA Institute

Independent directors counterbalance the management team and ensure that boards keep the organization's interests and shareholders in mind.

KEY RECOMMENDATIONS

1

Independent directors should constitute most of the board and play a significant role on board committees.

2

The roles of CEO and Chair of the Board should be separated, and the Chair should be an independent director.

3

Promote board diversity, particularly regarding gender and professional experience, to foster better quality decision making.

4

Encourage engagement of independent directors with shareholders.

5

Require comprehensive training and continuing professional development for independent directors.

6

Increase appointments of lead independent directors who directly represent investors.

MARKETS

How can companies and regulators promote board independence? This infographic illustrates key concerns and recommendations.

EXECUTIVE SUMMARY

The executive summary highlights global best practices for regulators, companies, and boards.

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