Raymond Cheung
Chartered Actuary · CRO · Board Adviser · Singapore
The Code of Corporate Governance asks Singapore nominating committees to plan succession for directors, not just the CEO. Most skip the board itself. Here is what real board succession planning looks like, and why the nine-year rule has turned it into a deadline.
The hardest board vacancy I have dealt with was not a CEO. It was an audit committee chair who stepped down at short notice for health reasons, three months before year-end. We had a CEO succession plan with named internal candidates and an emergency cover arrangement. For the audit committee chair we had nothing. The remaining independent directors were capable people, but none of them had chaired an audit committee through a year-end close with a regulator watching. We got through it by borrowing time from everyone, and I promised myself I would not sit on another board that had a plan for the CEO and none for its own key seats. [CONFIRM with Raymond: replace with a real episode if possible]
What the Code actually asks the nominating committee to do
Provision 4.1 of the Code of Corporate Governance 2018 sets out the nominating committee's duties, and the first is to make recommendations on the review of succession plans for directors, in particular the appointment or replacement of the board chair, the CEO and key management personnel. Note the order. Directors come first. Yet when I read Singapore annual reports, the succession paragraph almost always describes CEO and management succession. Director succession appears, if at all, as one sentence about board renewal with no detail behind it.
There is a reason for that. CEO succession is a management process the NC oversees from a comfortable distance. Director succession asks the NC to plan for the replacement of its own colleagues, sometimes including its own chair. That is awkward, so it gets deferred until a vacancy forces the conversation.
Why the nine-year rule turned good practice into a deadline
SGX's hard limit on independent director tenure means every independent director now has a known end date as an independent. You can read it off the annual report. A board that cannot tell you today who will chair its audit and risk committees in three years is choosing not to look. I have written before about how the tenure clock hits committees before it hits individuals: one reclassification can drop a three-person committee below its independence minimum overnight.
For insurers the runway is longer still. MAS Notice 106 already requires regulatory approval for director, chair and nominating committee appointments, and MAS's 30 September 2026 consultation proposes prior approval for the nominating committee chair itself. Add fit-and-proper checks and a strong candidate's notice period elsewhere, and in my experience a realistic lead time for a regulated board seat is nine to twelve months.
“If your board cannot name who will chair its audit committee in three years, it does not have a succession plan. It has a calendar.”
What a working director succession plan contains
The best nominating committees I have worked with keep this to a few pages and refresh it every year. It is not a long document. It is a set of answers to questions most boards never write down.
- A tenure map: every director's appointment date, the date they cross nine years, and their re-election cycle, laid against committee memberships for the next five years.
- Named successors for the key seats: board chair, lead independent director, and the chairs of the audit, risk, remuneration and nominating committees. Ideally one internal candidate already sitting on that committee and one external profile.
- Emergency cover: who chairs each committee at a week's notice if the incumbent cannot, agreed in advance with the director concerned.
- A skills matrix tied to strategy, not to the current board. If the strategy says digital distribution, climate risk and regional growth, the matrix should show where those skills will come from in three years. This is also where the board diversity conversation becomes practical rather than a target.
- A standing external pipeline: a short list of candidates the NC has already met, refreshed every year, so that no search starts from zero.
The clustering trap
The quietest risk in director succession is clustering. Boards tend to recruit in waves. A new chair arrives and brings in two or three directors in the same year, and nine years later they all hit the tenure limit together. I have seen boards facing the loss of half their independent directors within eighteen months, with the audit and risk committee chairs among them.
The fix is to stagger on purpose. Sometimes that means asking a strong director to step off a year earlier than they need to. Sometimes it means bringing a new director onto the board a year before a seat opens, so they can sit on the committee and learn how it really works before they chair it. That second move costs a year of director fees. It is the cheapest insurance a board can buy.
How to tell whether your nominating committee is doing this job
Three tests. Ask the NC chair to name the likely successor for each committee chair without looking at the papers. Ask when the NC last met a potential director who was not referred by someone already on the board. And look at your board effectiveness evaluation: if it never asks whether the board has the skills it will need in three years, the evaluation and the succession plan are not talking to each other.
None of this replaces CEO succession, which deserves its own disciplined process. But a board that plans carefully for the CEO and not for itself has its priorities upside down, because the board is the body that has to manage a CEO transition when it comes. A board in the middle of its own disorderly renewal is in no position to do that well.
What I recommend
Put director succession on the nominating committee agenda as a standing annual item, separate from CEO succession, and take the tenure map to the full board once a year so every director sees the same picture. It takes one meeting to build and a couple of hours a year to maintain. The alternative is the scramble I described at the start, and every board I know that has been through one wishes it had spent those hours earlier. If you want an independent view of where your board's succession gaps sit, this is work I do with Singapore boards.
Common Questions
What is the nominating committee's role in succession planning in Singapore?
Under Provision 4.1 of the Code of Corporate Governance 2018, the nominating committee makes recommendations to the board on the review of succession plans for directors, in particular the appointment or replacement of the board chair, the CEO and key management personnel. That covers the board's own key seats, such as committee chairs, not only CEO and management succession.
How far ahead should a Singapore board plan director succession?
A useful nominating committee succession plan looks five years ahead on tenure and committee composition, because SGX's nine-year limit on independent director tenure makes end dates predictable. Searches for listed-company directors typically need six to twelve months, and MAS-regulated insurers and banks should allow longer because of regulatory approval and fit-and-proper requirements.
Does the SGX nine-year rule mean boards need a formal succession plan?
The rule does not mandate a written plan, but it makes one unavoidable in practice. An independent director who passes nine years can no longer be counted as independent, which can push audit, risk or remuneration committees below their independence requirements. Boards that map tenure against committee seats several years ahead avoid forced, rushed appointments.
What should a board skills matrix in Singapore include?
It should list the skills the board will need to oversee the company's strategy over the next three to five years, such as risk, audit and finance, technology, sustainability, industry and regional experience, and show which current directors cover each one and when they are due to leave. The gaps it reveals should drive the nominating committee's search priorities.
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About the author
Raymond Cheung is a Chartered Actuary, C-suite executive and board adviser with more than 20 years of experience across Asia in risk management, insurance, ESG and corporate governance. He is the CEO of CER Consultancy and an accredited trainer at SMU Academy and the Singapore College of Insurance.