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Harry Cassin
Publisher and Editor

Andy Spalding
Senior Editor

Jessica Tillipman
Senior Editor

Bill Steinman
Senior Editor

Richard L. Cassin
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Elizabeth K. Spahn
Editor Emeritus

Cody Worthington
Contributing Editor

Julie DiMauro
Contributing Editor

Thomas Fox
Contributing Editor

Marc Alain Bohn
Contributing Editor

Bill Waite
Contributing Editor

Shruti J. Shah
Contributing Editor

Russell A. Stamets
Contributing Editor

Richard Bistrong
Contributing Editor

Eric Carlson
Contributing Editor

Who then is a UK independent director?

A peer level board compliance committee, headed by a senior independent non-executive director with a majority of independent non-executive directors, should be a prerequisite for any company seeking to establish that it has put in place adequate precautions to prevent bribery.
The UK’s Corporate Governance Code makes a number of useful recommendations for ensuring the independence of such non-executive directors.
The Code suggests that in a company’s annual report, the board should identify each non-executive director it considers to be independent. The Code provides instances of what would be considered non-independence. For instance, a director who has been an employee of the company within five years; or, has had a direct or indirect material business relationship with the company or its officers; or has received remuneration, apart from a director’s fee, from a company’s employee or pension scheme; or has close family ties with the company’s advisers, directors or senior employees; or holds cross directorships or has links with other directors through involvement with other companies or bodies; or represents a significant shareholder; or has served on the board for more than nine years. The inclusion of such a person as a non-executive would constitute non-compliance with the Code and would require justification by the board.
Particularly relevant for a compliance committee, the Code suggests that where directors have concerns which cannot be resolved about the running of the company or a proposed action, they should ensure that their concerns are recorded in the board minutes. On resignation, a non-executive director should provide a written statement to the chairman, for circulation to the board, if they have any such concerns. The Code lays particular emphasis on the board ensuring that independent directors having access to independent advisors.
Considerable emphasis is placed on progressive refreshing of a board so that non-executive directors should only be appointed for specified terms and subject to re-election. A non-executive directorship beyond a six-year term will require a rigorous review. Non-executive directors who have served longer than nine years should be subject to annual re-election and there should be triennial external evaluations of the board’s performance.
Future and existing compliance professionals should take their companies to task unless they maintain an independent board-level compliance committee. The absence of one should represent both a career and compliance red flag. A company that does, will almost certainly provide a more rewarding career. At the same time, it may also be a critical factor in providing it with a statutory bribery defense. So it may pay to read the annual report.


Alistair Craig is a commercial barrister practicing in London.

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