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Board Diversity in Singapore

Chia Yaru

(2015) 27 SAcLJ 304

Conventional wisdom predicts that independent directors help curb director misfeasance by critically overseeing management, and is the hallmark of good governance. However, such wisdom might not be too wise and fully accurate as board independence was clearly insufficient to prevent corporate scandals such as Enron. Indeed, board independence is not sufficient in and of itself, and board diversity complements board independence in improving corporate governance. As there are many benefits to a diverse board, Singapore should adopt a gender quota regime to attain a critical mass of female directors on corporate boards. As the broader framework of Singapore’s Code of Corporate Governance is on a comply-or-explain basis, such a quota should similarly not be mandatory. Such a comply-or-explain gender quota strikes a good balance between capitalising on the effectiveness of a quota system, yet doing away with any rigidity which might come with it. A disclosure rule, promoting transparency in corporations’ diversity policies, should also be enacted to ensure corporations’ commitment towards gender diversity. Both the quota and disclosure rule are mutually reinforcing, and would definitely help Singapore in attaining an inclusive and vibrant society.