Time Limited Appointment

Time Limited Appointment

Time limited appointment means that the appointment of a director is pre-determined on a contract and limited for a specific period of time, for example 3 years.

Retirement by rotation is one of the time-limited appointment method, which means by the end of the appointment contract, a director can choose to vote for re-election. If he failed to be reelected, perhaps due to poor performance, then he cannot continue to be director. If he is reelected successfully, then his service contract will be renewed.

Time-limited appointment can reduce cost of contract termination, for example compensation paid to terminate a director’s contract.

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Time-limited appointment refers to the time limits of the directors appointed to perform the stewardship responsibilities.

Directors should seek for reelection after his first year of service. After serving for 3 years, the directors should follow retirement by rotation. After the director served for 9 years, he is considered to be not independent anymore. He then could not seek for re-election.

This is to ensure that objectivity and independence of the directors.