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Appendix 5

Individual director: pre-appointment checklist


The act of appointment is a relatively simple process. However, prior to accepting the
appointment the director should have full knowledge and a proper understanding of the
duties, responsibilities, risk and liabilities involved. In particular, prior to accepting the
appointment you should ensure that you can devote sufficient time to the position.
Due diligence
Prior to accepting appointment, it is vital that a prospective director carry out a due
diligence. Whilst the following list is extensive, the directors should make a professional
judgement as to the extent of enquiries and this will depend on the nature, size, type and
existing knowledge/past association with the company. The prospective director should
consider the extent to which he wishes to meet fellow directors and senior management
before accepting the appointment. Matters to consider include:
Board of directors
! appropriate number of board members given the size and nature of the company
! board committees (include audit committee)
! contribution required and whether opinion will be considered in boardroom
discussions
! board must include people with management experience
! discussion papers are presented to the board on a timely basis to allow adequate
preparation
! marketing, production, financing and other key aspects of the companys business
are identified in a corporate plan.
Experience of board members
Whilst there is a need for those experienced in general management, there is also a
need for some specialists. For example, in a manufacturing company, it would be advisable
for an industrially experienced director to be involved as there are many matters (safety,
environment, health and quality) which are peculiar to the manufacturing process and
would not occur in the normal experience of a director from a non-industrial background.
Role of management and board
Does the chief executive officer encourage all directors to participate in Yes
significant decisions?

No

Are the roles of chairman and chief executive officer held by different
persons?

Yes

No

Do the directors have unrestricted access to both management and


information?

Yes

No

Is the board satisfied with the calibre and co-operation of current


management?

Yes

No

Done

Considered

Obtain details of related party transactions.

Done

Considered

Soft copy available for download at http://www.kpmg.com.sg/toolkit

APPENDIX

Discuss with the chairman the culture and values of the


corporation and particularly the issues of corporate
governance.

Corporate governance

A-37

Strategy plan and corporate risk assessment


Review prior year strategic plans and reasons for actual
performance variations.

Done

Considered

Review the latest audited and managerial financial


statements.

Done

Considered

Review the latest Corporate Risk Assessment.

Done

Considered

Insist on timely and adequate information and explanations.

Done

Considered

Time required or the risks involved in relation to level of


remuneration.

Done

Considered

Time to properly perform duties.

Done

Considered

Type of contribution required to the company.

Done

Considered

Acquire a broad understanding of the company and its


market place, its competitors and its performance versus its
competitors in the market place.

Done

Considered

Do the companys activities present actual or potential


conflicts with your own interests?

Done

Considered

Controversial matters in which the company may have


previously been involved.

Done

Considered

Environmental policies of the company, if applicable

Done

Considered

Done

Considered

Done

Considered

Done

Considered

Done

Considered

Done

Considered

Done

Considered

Done

Considered

Done

Considered

Inquire as to the companys recent involvement in any legal


proceedings, or matters pending.

Done

Considered

Inquire as to whether the any relevant authority has raised


any queries regarding the companys activities.

Done

Considered

Done

Considered

Role and timeliness of receiving information

Activities of the company

Future for company products or services.


Issues of concern outlined in the annual report.
Knowledge of the ownership and control of the company.
Profitability of the companys operations.
Reputation of the company.
Other matters
Why did the former director leave (if applicable)? This
enquiry should be made to the chairman and the former
director.
Meet with external audit partner and head of internal audit.
Identify the receptiveness to suggestions and ideas.

Compatibility with major owners of the company.


Directors rights under the companys constitution that may

be of concern.

Done

Considered

Join an organisation of directors (for example, the


Singapore Institute of Directors) and read their publications.

Done

Considered

Peruse major contracts.

Done

Considered

Read widely on directors roles, powers, duties and


responsibilities.

Done

Considered

Ensure appropriate level of directors and officers insurance


is in force.

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