Hard limits on independent director tenure is an opportunity for boards

The announcement by Singapore Exchange Regulation (SGX RegCo) on Jan 11 limiting independent directors’ tenures to nine years came as little surprise to those who have been following the public discourse leading up to it. Part of this decision to do so lies in the view that despite attempts to encourage board succession planning and renewal, Singapore continues to have a disproportionate population of long-tenured independent directors (IDs).

One may argue that tenure does not solely define independence, but to have an ID (and this was uncovered by a Nanyang Business School study done in June 2022) serving for close to 50 years is certainly a stretch. That same study also revealed that around three-quarters of long-serving IDs are concentrated within the smaller companies, which are also likely to be family-run or owner-managed businesses.