Independent Director

Independent Director

Independent means independent of management and free from any business or other relationship or circumstance that could materially interfere with the exercise of a director’s independent judgement. For example, a director would not be independent if they had recently been employed by the company or have a contractual relationship with the company (other than as a director) or if they are related to a major shareholder.

In terms of the NZX Listing Rules an independent director is a director who is not an executive of the company and who has no disqualifying relationship. A disqualifying relationship means any direct or indirect interest or relationship that could reasonably influence, in a material way, the director’s decisions in relation to the company.   For example, a director would be deemed to have a disqualifying relationship if they had a substantial security holding or if the director is likely to derive, in the current financial year or the company, a substantial portion of his, her or its annual revenue during such financial year. NZX considers a “substantial portion” to be generally 10% of a director’s annual revenue.

Note that a non-executive director is not necessarily an independent director but that all independent directors are non-executive directors.

Source – IoD

This entry was posted in . Bookmark the permalink.