Why have an independent director?
Almost all Organisation for Economic Co-operation and Development (OECD) jurisdiction require the presence of independent directors at the level of the Board of Directors for:
- Investments
- ManCos
- Unregulated commercial companies
- Asset management
Independent director duties:
- Comply with laws and regulations
- Duty of care for management – business judgment rule
- Act at all-time in the corporate interest of the company
- The interest of the company as a whole – not the sole interest of one or several shareholders
- Violation of duties = potential directors liability
What is independence?
Independent can be defined as:
- Absence of conflict of interest
- Having the courage, conviction and strength to effectively assess and challenge the proposed decisions of other members of the management body
- Being able to ask questions to the members of the management body in its management function
- Being able to ask questions to resist « group-think »
It is required for each member of the board regardless of whether or not the member is considered as « being independent »
The role of independent directors
In practice independent director should be:
- A source of inspiration
- A substance over a form of approach
- An assessment to be carried out by the board itself
Undertaking to :
- Maintain in all circumstances independence of analysis, decision, and action
- Not to seek or accept any unreasonable advantages that could be considered as compromising the independence
- Clearly express opposition when of the opinion that a decision of the board could harm the company and draw all appropriate consequences in case of serious reservations against a decision
- Allow for hybridizing competences
Objective and unbiased outspoken outsider:
- Ensure a robust open debate and sound decision making
- Ensure a robust open debate and sound decision making
- Allow for hybridizing competences
What else?
- Participation on board committee for matters sensitive to conflicts of interest (audit/remuneration/nomination committee)
- Mission in committees limited to preparing recommendations and advice (Ultimate responsibility remains with the board)
- Any independent director is first and foremost a director, who is a part of a collegial body
- No personal and individual power within the company
Ready to start?
Just make a call to us and we will find the best solution for your business
Why Esperia to embody your directorship?
- To be compliant with the regulations
- To have multilingual experts by your side
- To have your unique tailor-made service
Don’t hesitate to contact us on spoc@esperia.eu for any demand concerning directorship services.