The Importance of Board Independence (IVOR nr. 90) 2012/6.7:6.7 Summary and outline

The Importance of Board Independence (IVOR nr. 90) 2012/6.7

6.7 Summary and outline

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(Consideration 6.1) The European Committee and the OECD recognise the importance of independence without addressing desired levels of board independence, which is left to individual countries. Both institutions stress the need for board committees in areas in which conflicts of interest may arise, such as audit, remuneration and nomination. In order to achieve independence, CEO duality is not considered to be a good practice. The European Commission has established independence criteria fordetermining a supervisor’s independence. In its Green Paper the European Commission stresses the need for diversity, which is also important for independence. The OECD recommends complementing these criteria with requirements for competences and quality.

This is a brief summary of the recommendations of the European Commission and the OECD with respect to independence. These two institutions influence the policymakers and legislators in the countries of this study and are therefore described in this chapter. The next three chapters describe the legal frameworks of the countries in this study regarding independence. Chapter 7 starts with the United Kingdom, chapter 8 follows with the Netherlands and the situation in Sweden is described in chapter 9. All three chapters have an identical outline. The first section describes the history of corporate governance by describing the corporate governance initiatives that have ultimately led to the current situation. The second section investigates the six legal issues, as presented in section 6.4. Each subsection addresses one single issue. The third and final section of each chapter summarises and concludes. The structure of the summary and conclusion is based on the three building blocks of independence: person, composition/structure and preconditions.

The final chapter of Part II of this study is chapter 10. In chapter 10 a comparison is made between the three countries, based on the three building blocks. This comparison is used to address the three partial research questions with a legal approach. Finally, a conclusion is formulated.

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