Striving for true board independence?
Topic: CxO & Board
Board independence used to feel like a simple yes-or-no question. Either you ticked the boxes—no financial ties, tenure compliance, no close connections to management—or you didn’t. But today, that clear-cut picture has become far more complex. Especially for companies operating across borders, where recommendations and expectations vary widely.
A puzzle with no universal solution
Think of board independence as a puzzle with pieces that don’t quite fit together. In one country, owning 5% or more of shares may disqualify a director from being considered independent. In another, that threshold could be four times higher. Some markets see long tenure as a sign of knowledge and continuity; others worry it erodes objectivity. And there are many more pieces to the independence puzzle.
In a rapidly changing reality with shareholders in multiple jurisdictions, how do boards navigate?
Transparency is the foundation of trust
It’s tempting to think of independence as a box to tick when appointing a director. But independence is more like a journey than a destination. Directors’ circumstances evolve, business landscapes shift, and what was once independent can become compromised over time.
True independence rests on transparency. From the moment a director joins the board, potential conflicts should be openly discussed. But transparency can’t be a one-off event. It needs to be woven into the fabric of board culture and effectiveness.
Some boards have made conflict of interest declarations a regular agenda item. This simple practice creates space for candid conversations, builds trust, and strengthens decision-making. And beyond the boardroom, investors and stakeholders increasingly expect clear disclosures about how independence is managed. Regular, honest reviews of independence are no longer optional - they’re essential.
Why it matters
Maintaining independence is a delicate balancing act. Directors must be engaged enough to understand the business deeply yet detached enough to challenge appropriately. They must bring relevant perspectives without losing sight of the company’s legacy, purpose, and culture.
This requires self-awareness, courage, and a willingness to speak up, even when it’s uncomfortable. It also demands that boards create an environment where diverse views are welcomed and robust debate is encouraged.
In today’s fast-moving, interconnected world, boards face independence challenges that demand more than ticking boxes. They need to discuss independence matters frequently commit to maintaining oversight.
Boards embracing this complexity are better equipped to steer their organisations through uncertainty and change. They will build trust with stakeholders, employees, and society and ultimately help their companies thrive.
