This is not a how-to guide or a detail explanation of a duty of an independent director or an audit committee member in a listed company. This is more of a rant of a member of an audit committee with the recent amendments to the listing requirements of Bursa Malaysia (not sure is this allowed or not but this is just a personal opinion)
I have been an audit committee member of a public listed company since 2006 in which I was given the task to be an independent non-executive member of the Board of Director. An independent non-executive Board of Director member is someone who is independent of the management of the company and is not holding any post at all in the company. Among them, it is also required for at least one of them to be competent in accountancy and one of the next best thing is a lawyer (which I am). So, there you have it, at the moment I was appointed I was actually over my head.
If you know my full name, and if you ever google it (I did!), you will find which company. It may seems like a big deal but let me tell you that in term of fiduciary rewards, it is not. You will only get some allowance south of RM3,000 if you are lucky and maybe lesser if you not so lucky. I remembered the gossips that all of us had when I attended the compulsory course I had to attend conducted by Bursa Malaysia (the Malaysian stock exchange) when we were to be appointed to the Board. Most of us felt we are not paid enough with the responsibilities that we carry. And one of those in attendance in that course was a former Federal Court judge!
That is what most of us are lamenting about nowadays when we hear that an audit committee member can be found at fault if they did not disclose any indiscretion or anything which will devalue the share of a company especially those dubious investments company can sometimes make. It means that we are supposed to know everything the company do as if we are the management. It also require us to have communications with the employees as if we mingle with them every other day. They have just launch a whistle blowing policy in Malaysia due to a few corporate scandals which have been happening all over Malaysia. We are to reprimand the management and also to report any mismanagement to the authorities which can be Bursa or the Securities Commission. Not so easy if we are to have nothing to do with management isn't it?
Yes, we can question the Board of Directors (those in management) when we have the meeting but being entrepreneurs, we can't actually stifle them can we? If they want to invest in something, I usually try to question the viability of the project and sometimes, at the risk of sounding trying too hard ( which I don't really care as long as I discharge my duty), I do step on a few management toes. But, I do give a caveat in a form of the trust that I have in the founder of the company which had actually founded the company in the 70s himself. He did dabble in politics but that seems to be going downhill after March 8, 2008, which makes him concentrate on his company again.
As much as I like to rant, being an investor myself, I am actually someone who believe in what the authorities are doing (in contrast with the politicians). As much as I hate being on a tight leash as an independent director and an audit committee member, I understand the rationale of it and is all for it. That is why sometimes, as much as I love the idea of entrepreneurship as the next entrepreneur, when you raise money from the public for your listed company, you need to know you are already in a different ball game...