9.3.2.2 Board committees

The requirements for board committees are not good from an independence viewpoint in Sweden. The audit and remuneration committees must have a majority of members who are independent of the company and its executive management. The audit committee also needs one member who is independent of the major shareholders. Employee representatives may have a position on board committees as well. These requirements stress that independence on board committees is apparently not considered to be important. A fully independent audit committee and remuneration committee would be better for the independence of board committees and of the whole board.

The nomination committee is very special in Sweden. It is not a subcommittee of the board, but board members may be members of the nomination committee. However, board members may not constitute a majority; the other members are shareholders. The shareholders have a very large voice on the nomination committee, which makes the composition/structure building block of independence very weak. Sweden should reconsider their requirements and bring them more in line with generally accepted good corporate governance practices.