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An ongoing focus of corporate governance is the role of independent directors on company boards. Discuss the expectation of the Corporate Governance Council that the majority of directors on the boards of ASX companies should be independent.
In your discussion you should identify the arguments for and against the view that boards should consist of a majority of independent directors, and include a response to the following:
• In whose interest must a director act?
• What is the primary role of a board of directors?
• What does the term `independent director` mean? Give an example of a non-independent director.
• What legal strategies are available under Australian law to manage the independence of a board’s decision making? Eg. Identify sections within the Corporations Act, or common law requirements
• Should specific board positions be held by independent directors (eg Chairman). If so, why? If not, why not?
• Should better corporate governance, rather than better corporate performance, be the goal of the board?
• What is the relevance of the disclosure requirement in ASX Listing Rule 4.10.3?
• How is Principle 2 – and recommendations – of the ASX’s Corporate Governance Council’s ‘Corporate Governance Principles and Recommendations’ relevant?