1. GOVERNANCE - BEST PRACTICES David I. Matheson, Q.C. McMillan Binch LLP HONG KONG FORUM NOVEMBER 2002

2. 2 Developing “best practices” for Governance for the Federation and Members. Governance: “A combination of both the overall processes and structures that are used in directing and managing operations and activities.” Governance - Best Practices

3. 3 Stewardship: “The responsibility of boards of directors involved in overseeing and setting policies”. We are all aware of the worldwide focus by corporations on good Governance. Why not us? Governance - Best Practices

4. 4 We can improve our organizations, and our management and directorship effectiveness. It is important to share Governance successes and information. What should we do to benefit existing and new members? Governance - Best Practices

5. 5 Start with fundamentals: –Objects and Mission Statements of Associations, By-laws, Mandates for Boards, Committees and Program. Steps to consider: –Make better use of our Federation’s web-site: have a “Governance - Best Practices” hyperlink on the web-site and the websites of Associations. Governance - Best Practices

6. 6 All Associations should contribute to the Federation’s hyperlink by providing their Governance information. The “best practices” should be made available to everyone. Have the Federation designate a person responsible for Governance issues who can be conveniently contacted for advice. Have Associations designate a person. Establish a Governance chat room on the websites. Regularly select important subjects for discussion. Governance - Best Practices

7. 7 What about these subjects: –Do you have an effective board? –What makes a good board? –Is your board micro-managing too much? –Do you need an executive director (full-time or part-time) if you do not already have one? Governance - Best Practices

8. 8 Are you attracting the right directors? If not why not? Governance - Best Practices

9. 9 Are new directors given a director’s manual on their roles and responsibilities? Governance - Best Practices

10. 10 Some Associations are having problems getting business leaders to go on their Boards. Why? They are being asked to do management and committee work! They are more inclined to play advisory, overseeing, funding and policy roles. Governance - Best Practices

11. 11 Do not impose assignments on such business leader directors that should be the responsibility of executive directors or committees of Associations. Governance - Best Practices

12. 12 What about having an Advisory Board made up of business leaders in your community who are interested in trade and investment, particularly with Asia and through Hong Kong? Governance - Best Practices

13. 13 To be a stronger organization consider obtaining powerful business people involved in a manner that suits them so that they can make a contribution. Governance - Best Practices

14. 14 Set up the structure that fits you best. One solution does not fit all! Governance - Best Practices

15. 15 Every organization is different. Some of these suggestions may not be appropriate. What about succession planning for officers, directors and advisors? Do you have good planning for this? Governance - Best Practices

16. 16 What about your committees? Are new chairpersons of committees given written mandates or descriptions of the roles and responsibilities of the chairperson and the committee? Does your Association have a finance and audit committee and good checks and balances? Governance - Best Practices

17. 17 How many Associations have director and officer liability insurance coverage? Governance - Best Practices

18. 18 How many understand the policies? How important is this for our Associations? Is there little or no real exposure? Share information on this! How much would your Association benefit from sharing such Governance issues and information? Governance - Best Practices

19. 19 “To be effective, boards need the right people, the right culture, the right issues, the right information, the right process and the right follow-through” 1 1 Source (The 2001 report of the National Association of Corporate Directors Blue Ribbon Commission on Board Evaluation: Improving Director Effectiveness) Governance - Best Practices

20. 20 Above all, we all must enjoy what we do! So where do you want to go from here? Governance - Best Practices