NZME board battle: What makes a director independent and why does it matter?

Shareholders should want to be sure directors are aligned with their interests, says Oliver Mander. Photo / Getty

When expatriate businessman Jim Grenon proposed replacing NZME’s board and nominated himself and three others at the coming annual general meeting in April, the company indicated it had some due diligence to do.

In an update to shareholders about the director nomination, NZME chair Barbara Chapman said the board was “committed to a process that delivers the best outcome for all shareholders”.

“[The process] will include director nominee biographies and the board’s assessment of whether the director nominees meet the NZX Listing Rules’ director independence criteria.”

So, what qualifies an independent director? BusinessDesk talked to some experts to find out.

NZX Listing Rules stipulate that a board must have at least two independent directors, and the NZX Corporate Governance Code recommends that a majority of directors be independent.

Whether or not a director is independent depends on whether the individual has a “disqualifying relationship” with the company in question.

Russell McVeagh partner Ian Beaumont drew attention to the fact that the listing rules were recently updated to increase disclosure surrounding independence.

NZ Shareholders’ Association chief executive Oliver Mander said he will watch closely for disclosures about the proposed NZME board members.

Read the full story on BusinessDesk here