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Independent Directors may usually be assisting in the decision-making of the company in the matters relating to the financial situations as well as administrative areas. Their main duties of independency regarding their work put the company in comfortable situation. The importance of Independent Directors is very necessary to view in the modern days of corporate governance, theboard of directors and the interrelation of independent directors within this framework in achieving the objectives of any enterprise.The concept of independent directors is that they are professional bodies and self-set standards than any other profession.A wider concept of independence applies to directors and this has beenthe subject of most listing requirements and principles of good corporate governance. The Principles of corporate governance define the independent directors as “Independency of Board usually requires sufficient number of members to be independent of management”. This requires that such members should not be employed by the company or its affiliates and not be closely related to the company or its management through significant economic, family or other ties.UCF1101AFPage 5
Ethics and CorporateGovernance[INDIVIDUAL ASSIGNMENT]Why a company need Independent Directors:There is some several ways of benefits that an independent board of directors can involve in a company, ranging from long-term survival to improved internal controls. The Independent Directs in the board can do:Makes policies of counterbalance management of the weaknesses in the company. Can Create ensure legal and ethical behavior at the company, while strengthening accounting controls.Extend the “reach” of a company through contacts, expertise, and access to debt and equity capital.Could bring such sources which can be well-conceived, binding and suggest strategies and policies which can help in the future and long-term decisions for a company.Can bring some plans which help a company to survive, to grow, and to prosper over timethrough improved succession planning through membership in the nomination committeeetc.Independent board members can contribute significantly to the decision-making of the board. They can bring an objective view to the evaluation of the performance of the board and management. In addition, they can play an important role in areas where the interests of management, the company and shareholders may diverge such as executive remuneration, succession planning, changes of corporate control, take-over defenses, large acquisitions and the audit function.The majority of the board are genuinely independent they have the power to implement board decisions, even contrary to the wishes of management or a major shareholder, if the need arises.