Chapter 3 - Directors and Board Architecture Different...

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Directors and Board Architecture Different Types of ‚Director‘ and Director Appointment Executive Director - Member of the board of directors - Member of both the board circle and the mgmt triangle - CEO is likely to be a member of the board Non- executive Director - Member of the board - Does not hold any executive mgmt position in the company Independent non-executive director (INED) - Director with no affiliation or other relationship with the company - Independence is clarified in the codes of good practice in CG - Successful INED needs to be capable of thinking independent Connected non-executive director (CNED) Outside director - Perceived to be independent - Used in the US and jurisdictions influenced by US practices to refer to an non- executive director - Independence requires not to accept any consulting, advisory or other compensatory fee from the company or be an affiliated person of the company or any of its subsidiaries Shadow director - Not a formal member of the board - Able to exert pressure on the decisions of that board Alternate director - Person who can take the place of another director when that director cannot attend meetings - Has all the rights and duties of any director under company law Nominee director - Nominated to the board by a major shareholder or other contractual stakeholder - Represents their interest - Dual loyalties – loyalty to the company and loyalty to share- and stakeholders Governing director - Director with dominant powers in a private company Worker director or employee director Associate director - Title of director - Not legally a member of the board - Do not have the rights or responsibilities of a director - Why? Prestige, reward, status Cross-directorships - Directorships held by a set of directors in various companies - Why? Economic benefits, enables rare talents of experienced and well-connected directors to be more widely available - Only possible when companies are not competing The Appointment of Directors 1
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- Three situations leading to the appointment of a director: Re-appointment of a director’s term of office Appointment to fill a vacancy arising on a resignation, etc. Creation of an additional directorship
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Chapter 3 - Directors and Board Architecture Different...

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