A non-executive director should be independent  

Factors that may compromise independence

… of executive and advisers 

  • Employment in the past 3 years
  • Senior employment by a significant professional adviser in the past 3 years

… of substantial shareholders

  • Ownership of over 10% of the voting rights in the company’s shares
  • An officer, director, representative or employee of such a shareholder

… of the company’s investments

  • A director or employee of another company in which the main company has invested more than 10% of the share capital 

… of customers, suppliers and other service providers

  • A major supplier or customer to the company (or their representative or executive)
  • A material contractual relationship with the company
  • Receiving fees for services to the company at a level indicative of either significant involvement in a company’s affairs, or are significant in relation to the salaries received by directors.

… of relationships which may impact decision making

  • Relationships (including other directorships or with related parties) that could be (or be perceived to be) capable of materially interfering with acting in the company’s best interests.
  • Benefiting from a related party transaction 

… of incentive pay

  • Participation in performance incentive schemes, including options that are also granted to executives 

… in a takeover bid

  • Participating in a bid for the counterparty (either as a buyer or seller)

… due to an appropriate length of board tenure

  • Non-executive directors who have served longer than nine years should be subject to annual re-election. The Board should have a succession plan in place to address long-tenure of directors.