At this stage of development in our market it is more appropriate to allow the shareholders to decide whether there should be an age limit for a board director and if so, what that limit should be for the respective company. Perhaps a more critical issue is board diversity and the need to have the right balance. Boards must have systems in place for self assessment and succession planning. Regulators in most parts of the world share a similar view.
On managing shareholder expectations of dividends, any thoughts?
Recognizing the shareholders' expectations should be one of the Company's highest management priorities. A listed company should aim to provide shareholder returns through comprehensive consideration of the business environment, including business performance, retained earnings, and a balance between dividends and funds required to support growth plans. However the dividends policy if not managed well can also lead to problems such as raising unrealistic expectations amongst shareholders and creating over dependence on regular dividend payouts. Increasing demands for dividends can strain cash flow and prevent the company from reinvesting profits in future growth, as well as for badly needed capital improvements. This can lead to an illiquidity spiral which hinders the company's ability to pay dividends in the future. In terms of allocation of financial resources, dividends is not necessarily the only way of meeting shareholders' return-on-equity objectives.