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The Universal Currency of Trust - Building Independent Boards for a New Era of Cross-Border Accountability
Insights from the
Institute of Corporate Directors Malaysia (ICDM)
As we stand in 2026, the theme of Corporate Governance Beyond Borders is no longer merely a forward-looking aspiration but a complex, daily reality. Capital is fluid, markets are inextricably integrated, and stakeholder expectations are converging at an unprecedented pace. In the modern corporate landscape, investors, regulators, and partners have expectations on companies that it will be managed responsibly, strategically and in alignment with their long-term interests. With trust increasingly recognised as the new corporate currency, one role stands firmly at its core: the Independent Director.
The importance of a truly independent board cannot be overstated. Previously, the role of a non-executive director was viewed as a ceremonial and prestigious postretirement role. Today, that view is obsolete. Directors are the conscience of the corporation and stewards of longterm value. Their mandate is rigorous – acting only in the best interest of the company and stakeholders, balancing the pursuit of profit with the demands of people and planet. In a landscape defined by rapid technological disruption, climate urgency, and geopolitical shifts, they serve as the essential anchor of trust.
But this raises the fundamental question that plagues boardrooms globally:
Are they truly independent or more importantly, what does independence look like?
When key decision-making power is held by a controlling shareholder or a closely linked group, true independence is harder to exercise.
The Independence Paradox: Form vs. Substance
The heart of this issue often lies not with the individual director, but in the appointment process itself. Before we even look at the qualifications of an individual, we must consider the overall composition of the board, and critically, who determines it. If independent directors are selected primarily from the personal or professional networks of controlling shareholders or senior management, their independence is often compromised from the very start. This reliance on closed networks creates a sense of obligation to the appointer rather than to the broader shareholder base, leading to the core governance risk that keeps global investors awake at night: directors who are independent in form, but not independent in substance.
This is why the conversation must move beyond regulatory compliance. Regulators across the world are working to strengthen frameworks. In Malaysia, we have introduced stricter rules, such as tenure limits, to prevent the risks of over-familiarity. But rules alone cannot solve the challenge. Even when a director is appointed with the best intentions, their effectiveness can be stifled by barriers such as information asymmetry and a boardroom culture where deference to a dominant chairman stifles dissent.
To truly mitigate this issue of substance over form, we must look beyond the individual to the architecture of the board itself. Structural checks and balances are required to prevent the concentration of power. When key decision-making power is held by a controlling shareholder or a closely linked group, true independence is harder to exercise. For instance, in companies where the board is led by an Executive Chairman, the introduction of a Senior Independent Director (Lead Independent Director in some jurisdictions) becomes a vital mechanism to balance power dynamics and ensure objective leadership. Furthermore, we must strictly limit the number of Executive Directors on the board. Maintaining a healthy ratio where Independent Non- Executive Directors (INEDs) hold a distinct majority ensures that the independent voice is not merely heard, but carries the necessary weight in decision-making.
However, structure is only half the equation; rigorous assessment is the other. We must abandon the boxticking approach to board effectiveness. Too often, internal evaluations fail to catch the subtle dynamics that kill independence, such as group think. This is where an independent board evaluation brings a more transparent view of independence - one that allows the board to strengthen its composition, refresh skill sets, improve selection processes and reinforce accountability. Unlike internal reviews, external evaluators can objectively assess whether the board possesses true independence of mind, identifying gaps in behaviour and culture that impede genuine challenge.
The Solution
The challenge is not merely in appointing an independent director, it is enabling them to function independently. True board independence in Asia requires:
• An enabling boardroom environment - a Chair who normalises healthy dissent, fostering a safe space where directors can speak openly, test assumptions and raise counter-views without intimidation or consequence.
• Continuous professional development - so INEDs can remain skilled, confident and future-focused to challenge with courage and contribute meaningfully to decision-making.
• A transparent nomination and appointment process - supported by diverse sourcing rather than relationship-driven appointments, and strengthened further through the use of independent external sources.
• Convening of INEDs - holding separate sessions to raise matters that could weaken independence or board objectivity
• Consistent talent pipeline - A robust and continuous pipeline of INEDs equipped with the competencies, mindset and independence required for modern governance.
In Malaysia, we have introduced stricter rules, such as tenure limits, to prevent the risks of overfamiliarity. But rules alone cannot solve the challenge. Even when a director is appointed with the best intentions, their effectiveness can be stifled by barriers such as information asymmetry and a boardroom culture where deference to a dominant chairman stifles dissent.
This is where IODs such as the Institute of Corporate Directors Malaysia (ICDM) and counterparts like India's own Institute of Directors (IOD) focus our collective efforts. To tackle assurance, we must champion the professionalisation of directors. At ICDM, our continuous development programmes ensure directors are equipped to navigate modern agendas. A director in 2026 must be conversant in AI ethics, cybersecurity, and ESG; this is no longer a role for the generalist amateur, but To fix the pipeline, we must create transparent mechanisms that connect qualified talent with opportunity. ICDM's approach has been to develop a national Directors Registry with a pre-screened pool of talent. This allows boards to find the right director with the right skills objectively, bypassing the biases of the old boys' network. Crucially, this pipeline thinking extends beyond our borders. Initiatives like the ICDM-led ASEAN Directors Registry offer transparency and access to a diverse pool of credentialed directors from across Southeast Asia. the specialised professional.
The New Global Standard
The path beyond borders will not be defined by a universal rulebook, but by the universal demand for boards that possess true independence in substance. Independence must be practiced, not simply professed - and boards that uphold it will lead with credibility, resilience and purpose.
Back to HomeAuthor
Ms. Jackie Mah
President & Chief Executive Officer - Institute of Corporate Directors Malaysia (ICDM)
Owned by: Institute of Directors, India
Disclaimer: The opinions expressed in the articles/ stories are the personal opinions of the author. IOD/ Editor is not responsible for the accuracy, completeness, suitability, or validity of any information in those articles. The information, facts or opinions expressed in the articles/ speeches do not reflect the views of IOD/ Editor and IOD/ Editor does not assume any responsibility or liability for the same.
