Home' A Plus Magazine : Nov 2012 Contents 36 November 2012
"Independence is generally defined in
material terms such as ensuring that there
is a period of time between a chief executive
officer stepping down from the role before he
or she becomes a member of the board," says
Ann-Maree Moodie, managing director of
The Boardroom Consulting Group, a corpo-
rate governance consultancy in Sydney.
"Advisers to the company, such as part-
ners in accounting and law firms, must also
wait for several years before they are eligible
to join the board of the company which their
firm has been advising," she adds.
As well as independence, independent non-
executive directors must meet the other cri-
teria of a director as defined in the HKEx List-
“Every director of a listed issuer must sat-
isfy the exchange that he has the character,
experience and integrity and is able to dem-
onstrate a standard of competence commen-
surate with his position,” says Randy Hung,
executive director and chief financial officer
of China Fiber Optic Network System Group
and an Institute member. Hung himself is
an independent non-executive director of
HKEx-listed Zhongyu Gas Holdings as well
as a Hong Kong Institute of Directors council
The exchange may request further infor-
mation regarding the background, experi-
ence, other business interests or character of
any director or proposed director of a listed
issuer, he adds.
Ricky Cheng, director of risk advisory
ser vices at BDO in Hong Kong, says indepen-
dent non-executive directors should also be
comfortable with numbers. "They should
also possess the necessary financial knowl-
edge so as to discharge their oversight duty,"
he says. "To be effective, independent non-
executive directors should challenge the ap-
propriateness of the decisions made by the
executive management and drive the board
in committing to a higher standard of corpo-
rate governance practices.
"One thing that must be emphasized
is that the general investment public has
placed their trust in and reliance on the in-
Character of independent directors
According to a study by the Korn/Ferry Institute, the research arm of one of the world's largest executive
recruitment firms, essential characteristics of independent non-executive directors can be divided into those
that are core, those that are now emerging and those that are likely to increase in significance in the future.
• A wealth of varied experience that allows them to understand and advise on a range of issues.
• An inquisitive, analytical and independent mind that drives them to ask the right questions, make impartial
judgments and offer intelligent advice.
• Excellent interpersonal and communication skills not only to express their judgments but also to build trust
• The integrity to act ethically and in the best interests of the company.
• A detailed understanding of the operational procedures of the company at all levels.
• An intimate understanding of every aspect of the company, from its culture to its customer base.
• Willing to commit more time. Previously attending board meetings was enough, but nowadays almost 36
days per year is a minimum expectation because they must be fully engaged and work between meetings in
order to get to know the business, understand the issues and build relationships.
• An expert understanding of finance, particularly as the world emerges from the global financial crisis.
• An understanding and knowledge of how to mitigate all risk factors, from operational risks to financial risks.
• Not only technology savvy, but also a firm grasp of how technology can transform business and operations.
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