The Independent Director's Dilemma : Is there ever a safe environment in which to be an independent director?
Elise Margow, BA, LLB
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There was a time in the not too distant past when it was generally accepted that directors of corporate boards constituted a closed network. As a consequence, the role of directors and their accountabilities seemed shrouded in mystery – a mystery that few people outside of the directors' circle were interested in solving.
However, after the profligate corporate excesses of the 1980s both regulators and shareholders globally and in Australia began to demand changes to the traditional composition of corporate boards, including a requirement that the directors' club include independent directors outside of the traditional closed networks.
Corporate excesses and collapses in Australia also resulted in the introduction over time of a more stringent regulatory environment replete with personal penalties for directors.
We therefore have a corporate environment today where more diverse directors are invited onto boards as independent directors, while at the same time the personal risk associated with being a director has increased exponentially.
This leaves a budding independent director with a dilemma. The coast which has been cleared to enable directorship opportunities for those previously denied them is also filled with sharkinfested regulatory waters.
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