Publication of a Policy Paper on director independance
The Institute for Governance of Private and Public Organizations proposes a new and original approach to the issue of director independence
In a report released today entitled The Independence of Board Members: A Quest for Legitimacy, the Institute for Governance of Private and Public Organizations (IGPPO) proposes that any organization governed by a board of directors should strive to constitute a board that is both legitimate and credible.
The issue at stake is not so much the independence of boards, but their legitimacy and credibility. Independence is meaningful only insofar as it reinforces the legitimacy of a board. And only through its legitimacy does a board acquire the authority to oversee the management of an organization.
For public or private organizations without shareholders or with no active shareholder owning more than 10% of the common equity, boards should include a clear majority of independent members. In addition, all standing committees should be made up exclusively of members independent of management.