The Importance of Board Independence (IVOR nr. 90) 2012/9.2.0:9.2.0 Introduction

The Importance of Board Independence (IVOR nr. 90) 2012/9.2.0

9.2.0 Introduction

Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.Deze functie is alleen te gebruiken als je bent ingelogd.

For the analysis of the Swedish situation it is important to rely on the Swedish Companies’ Act 2005,1 the Swedish Code of Corporate Governance 2010 and the Swedish Annual Accounts Act (Årsredovisningslag) and on the rules of the Exchange (Swedish Corporate Governance Board 2010: 8).

This section describes the six issues regarding independence in Sweden. Table 9-1 gives a brief description of these issues for the Swedish legal framework. In the remainder of this section, these issues are elaborated upon. This chapter focuses solely on listed public companies (publikt aktiebolag).

Table 9-1: Brief description of the six issues regarding independence for Sweden.

1. The board structures available to the company

In principle, Sweden has a unitary board structure. However, the board of directors consists solely or primarily of NEDs. Only one member of the executive management is allowed to have a position on the board, which may be the managing director. The managing director is a separate corporate entity, which receives instructions from the board of directors.

2. The appointment of supervisors

The general meeting appoints the members of the board. The articles of association may provide that a part of the board is appointed in another manner, such as by the government or a large shareholder. However, more than half of the board should be appointed by the general meeting. Furthermore, employees are entitled to appoint two (small companies) or three (large companies) employee representatives to the board.

3. The removal or suspension of supervisors

A board member may be removed by the general meeting through the adoption of an ordinary resolution.

4. The independence criteria and their application

The SCCG distinguishes independence from the company and its executive management and independence from major shareholders. The independence criteria are listed in subsection 9.2.4. The criteria for independence of the company and its executive management focus on seven relationships and circumstances, which cover (previous) managing directorship, employment, additional payments, business relationship, auditing relationship, cross-directorships, and family relationship. The independence criteria for independence from major shareholders focus on stakes of at least ten per cent in the capital of the company.A majority of the board members elected by the general meeting should be independent of the company and its executive management, of which two board members should be independent of major shareholders.

5. Other parts of law or regulations that influence the independence of supervisors

Board members are not allowed to participate in decision-making on agreements in which conflicts of interest may arise.Evaluation of the board should be conducted annually and the results must be disclosed to the nomination committee.The board should strive for equal gender distribution.

6. Enforcement of the requirements regarding independence

Companies should include a corporate governance report in their annual report or publish a separate corporate governance report in which they state whether they have complied with the SCCG and give reasons for departures, if any. The Exchange may impose penalties for non-compliance, such as fines, warning and delisting.

Deze functie is alleen te gebruiken als je bent ingelogd.