An independent director sits on a board without ties to the company, its management or its large shareholders that could affect their judgement. For Singapore-listed companies the meaning and the numbers come from the Code of Corporate Governance 2018 and the SGX Listing Rules as published in November 2026, and a consultation on changes opened on 27 October 2026, so the sources are the ones to rely on.
What does independence mean for a Singapore-listed company?
Under the Code, an independent director is independent in conduct, character and judgement, and has no relationship with the company, its related corporations, its substantial shareholders or its officers that could interfere, or be reasonably perceived to interfere, with the director's independent business judgement in the best interests of the company (Provision 2.1). A substantial shareholder is one with an interest in not less than 5% of the voting shares.
The SGX Listing Rules add fixed tests. Under Rule 210(5)(d), a director is not independent if employed by the issuer or a related corporation in the current or any of the past three financial years, and the same applies if an immediate family member was so employed and the Remuneration Committee determined that person's pay. The third test is tenure, covered next.
The Nominating Committee decides each year whether a director is independent (Provision 4.4), and directors disclose relationships that may affect independence. If the Board treats a director as independent despite a relationship, the company discloses the relationship and its reasons. The Board must also identify each independent director in the annual report.
The nine-year limit on tenure
A director who has served the issuer for more than nine years in total is not independent under Rule 210(5)(d)(iv). Years before and after listing both count.
SGX amended its Listing Rules on 11 January 2023 to set this limit, and deleted the earlier two-tier shareholder vote that let some long-serving directors stay independent. The limit takes effect at an issuer's annual general meeting for the financial year ending on or after 31 December 2023. Until the conclusion of the next annual general meeting, such a director may still be treated as independent. SGX's transitional note refers to resignation or redesignation as non-independent. MAS amended the Code the same day.
Boards tend to keep each independent director's start date and nine-year date on record and to plan succession ahead of it. SGX's release on the October 2026 consultation does not mention a change to this rule, though the consultation paper is where that would be confirmed.
How many independent directors must the board have?
Under Rule 210(5)(c), an SGX-listed board must have at least two non-executive directors who are independent, and independent directors must make up at least one-third of the board. The one-third requirement took effect on 1 January 2022. If a retirement or resignation leaves the issuer short, it should fill the vacancy within two months, and not later than three.
The Code goes further. Provision 2.2 expects independent directors to make up a majority of the board where the chair is not independent. The Code applies on a comply-or-explain basis, so a company that does not meet it must explain why. Provision 2.3 expects non-executive directors to make up a majority of the board.
The Code treats the chair as not independent when the chair is not an independent director, is also the CEO, is an immediate family member of the CEO, has close family ties with the CEO as the Nominating Committee determines, or is part of the management team.
The Nominating Committee must have at least three directors, with a majority, including its chair, independent (Provision 4.2). The October 2026 proposals would require the main board committees to have an independent chair and a majority of independent members. They are proposals only.
Board diversity disclosure
A listed company must keep a board diversity policy and describe it in its annual report. Rule 710A(1) requires a policy that addresses gender, skills and experience, and any other relevant aspects of diversity.
Rule 710A(2) requires the annual report to describe the policy, including the targets, the plans and timelines for reaching them, progress, and how the mix of skills, talents, experience and diversity of the directors serves the issuer's needs. Provision 2.4 of the Code asks the board to disclose its policy and progress. This is a disclosure rule, so the company sets its own targets and reports against them.
Training for first-time directors
A director with no prior experience as a director of an SGX-listed issuer must complete training in the roles and responsibilities of a listed issuer director (Rule 210(5)(a)). The training must be completed within one year of appointment to the board. For directors of a newly listed issuer, the deadline is the end of the first year of listing.
The Practice Note lists the programmes: the Singapore Institute of Directors' Listed Entity Directors Programme and Bridging Programme, and the ISCA Academy and SAC Capital Board of Directors Masterclass. A first-time director of a REIT manager appointed on or after 1 February 2024 must also take a REIT-specific programme.
In exceptional circumstances, the Nominating Committee may decide training is not needed because the director has relevant experience, and must disclose its reasons. SGX can still direct the director to attend. The programme list is in the current Practice Note.
How many listed boards can a director sit on?
The Code sets no fixed number today. Provision 4.5 asks the company to disclose each director's listed company directorships and principal commitments. Where a director holds a significant number, the company must give the Nominating Committee's and Board's reasoned assessment that the director can do the job properly.
The Practice Guidance asks the Board and the Nominating Committee to set guidelines on a reasonable and maximum number of directorships and principal commitments for each director or type of director. It notes that full-time executives may have less capacity than retirees, and that a non-executive chair role is likely to take more time.
The October 2026 proposals would cap the number of listed-entity directorships an individual may hold at five. Responses are due by 27 January 2027. MAS and SGX will then decide the final rules, timelines and transitions. Until then, the cap is a proposal.
What unlisted and family-owned companies can take from the rules
An unlisted company is not the target of these rules, but they can serve as a reference, since the Code applies to listed companies and the Listing Rules to listed issuers.
A family-owned company can write down its own test of independence, using Provision 2.1 as the model. It can adopt the same bright lines, such as no employment by the company in the past three financial years. It can set a review point for each independent director, with nine years as a reference. It can ask a nominating group to agree the criteria and process, as Provision 4.3 describes, and have each candidate declare relationships and other commitments.
None of this is a legal requirement for an unlisted company. It does show owners, lenders and new directors how independence is judged.
What are the steps in an independent director search?
An independent director search runs in stages, each with a written output. First, the board or its nominating group states what the board lacks, such as skills, sector knowledge, committee experience or size. Second, it writes the independence tests, the time needed and any limit on other directorships. Third, it agrees the process and who decides.
Fourth, candidates are identified and approached in confidence. Fifth, each candidate is screened: the CV is checked, relationships with the company, its shareholders and its officers are declared, and other directorships and principal commitments are listed. The Practice Guidance also asks the Board and the Nominating Committee to consider whether a candidate served on the board of a company with an adverse track record or a history of irregularities.
Sixth, the chair, the Nominating Committee and other directors interview the shortlist. Seventh, references and background checks are completed. Eighth, the Nominating Committee recommends and the board decides, recording any relationships and its reasons. Ninth, a first-time director plans the mandatory training and induction. Tenth, independence is reviewed each year, with the nine-year date tracked.
Questions clients and candidates ask
Can a director who has served more than nine years stay on the board?
The Listing Rules say such a director is not independent, and SGX's transitional note refers to resigning or being redesignated as non-independent. Whether the person stays on as a non-independent director is a decision for the board.
Does the chair of a listed company have to be independent?
The Code does not require it. If the chair is not independent, Provision 2.2 expects independent directors to be a majority of the board.
Do these rules apply to a private company?
The Code and the Listing Rules apply to listed companies, though a private company can adopt them voluntarily. Its legal duties are a matter for a lawyer.
Will the rules change soon?
Possibly. MAS, SGX and the Corporate Governance Advisory Committee opened a consultation on 27 October 2026, with responses due by 27 January 2027. The final rules and dates are not yet decided.
Sources
To discuss a search, write to teamsg@maxima.com.sg.
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