Independent Director Requirements in Australia and the Asian Region
Company and Securities Law Journal, Vol. 34, No. 8, pp. 631-637, 2016
8 Pages Posted: 8 Mar 2017 Last revised: 3 Apr 2017
Date Written: March 6, 2017
This paper sketches the historical evolution of independent director requirements for listed companies in Australia, followed by a brief discussion of their features and subsequent spread throughout much of the Asian region. The analysis is important first because this partial and haphazard convergence has occurred without much sustained discussion about the need to calibrate such requirements with underlying shareholding patterns (especially the extent to which shares are widely dispersed) and the actual problems faced by each jurisdiction’s corporate governance system. Independent director requirements instead tend to be mimicked or transplanted across borders partly due to pressure from Anglo-American institutional investors, and in the hope of improving corporate performance, notwithstanding longstanding doubts in that regard from empirical studies.
Second, although independent requirements are often introduced as a reaction to major corporate failures, some critics have castigated this as a cheap or second-best response, when compared to more challenging reforms (such as accounting standards reform). Other commentators have in fact highlighted the poorer performance of financial institutions with more independent directors during the Global Financial Crisis, or have begun reassessing more generally the tension between executive experience in the firm (or other expertise) and board independence.
Third, in Australia, a highly politicised debate recently emerged as to whether industry-based superannuation funds should be subjected to similar (or perhaps stricter) independent director requirements than those for listed companies.
Keywords: Corporate governance, comparative law, Asian law, Commonwealth law
JEL Classification: K10, K22, K23, K30
Suggested Citation: Suggested Citation