BREAKING up is hard to do, and that certainly applies to independent directors (IDs).
'In many instances, those contemplating resigning are in a difficult position,' said Lee Suet Fern, managing partner of Stamford Law Corporation.
Some directors may not want to be perceived as 'the difficult guy' by revealing the reason for their resignation, while others fear that they may not be taken on as IDs at other companies if they do so.
Those who decide to go public are 'very courageous', Ms Lee said.
'In many instances, they have worked very hard to resolve the issue. However, these efforts have been unsuccessful and they have chosen to try to signal to the shareholders and investing public that there are problems and they do so by resignation.'
A recent suggestion to amend the law to protect IDs for disclosing the reasons for their resignation is an interesting idea that may encourage resigning directors to be more candid in their resignation statements, she said.
Thio Shen Yi, joint managing director of TSMP Law Corporation, called on IDs here to 'break the barrier of deference' that is still so much part of Asian culture.
'It's a form of self-censorship that we all impose on ourselves,' he said.
'We don't want to rock the boat, we don't want to be the bad guy. The only time I see that happening is when the boards are fractured, when there's clearly going to be some potential form of liability and all the directors start taking positions against each other. That's way too late.'
A study by the Corporate Governance & Financial Reporting Centre showed that 69 per cent of the 226 directors that resigned from Oct 1, 2007 to May 31, 2009 said that they left for personal reasons.
But out of 106 directors resigning for personal reasons, 13 were appointed by another board within six months before or after they resigned, prompting questions of whether these IDs were truly resigning because of personal causes.
Under Singapore Exchange requirements, companies must declare if there is any difference of opinion on material matters between the director and the board.
Committee member of the Securities Investors Association (Singapore), Ang Hao Yao, said that shareholders should ask at annual general meetings why a director should be appointed especially after he resigned from another company without clear or persuasive reasons.
'When directors resign, they should give reasons to the satisfaction of shareholders,' said Mr Ang, adding that this is especially so since shareholders look to directors to safeguard their interests.
