DISCLAIMER: This post was last modified on 29 August 2024. Some information in this article may not be updated.

The roles and responsibilities of a company director

The role of a director in a company extends beyond administrative, managerial and supervisory duties. They are also expected to effectively navigate the business landscape to represent the company’s best interests while upholding ethical standards that comply with relevant regulations and respected market practices. 

In many countries, the law requires a company to have a board of directors that oversees its business activities. However, due to their ties to the company, both executive and non-executive directors face an inherent risk of conflict of interest, which can potentially undermine their objectivity. To mitigate this challenge, the role of independent directors has become increasingly crucial.  

Choosing an Independent Director: Our Insights 

Terence Garcia, Head of Directorship and Board Governance at Bolder Group, offers his thoughts on the qualities of an effective independent director and how they might benefit your company. 

What are the qualities of a good independent director?   

Terence Garcia: A key quality of a good independent director is the ability to exercise sound and independent judgment. They must have a strong professional background with specific experience and expertise, such as in accounting or law. They must also be able to adapt quickly to a new company. 

What’s the importance of having an independent director?  

Terence Garcia: Independent directors are essential for providing constructive criticism to the board by being prepared to challenge executive board members. Independent non-executive directors offer impartial judgment to the board’s decision-making process. They also play a crucial role in overseeing risk management and internal controls. 

How do independent directors ensure commitment to the company’s goals?  

Terence Garcia: They play a crucial role in ensuring commitment to your company. They work together to develop strategies and provide constructive criticism to challenge existing views. Their expertise involves overseeing the activities of executive directors to ensure that everyone meets their objectives and that the interests of the shareholders are protected. 

The benefits of having independent directors  

Objective assessment of a company 

Independent directors provide a fresh perspective and objectively assess the company’s strategy, goals and situation. They can make objective evaluations and supervise management decisions because they have no hierarchical relationship with inside directors. The lack of previous and existing relationships within the company allows for better prevention of conflicts of interest and insider control. 

Diverse experience and expertise 

Independent directors may have specific experience and expertise different from the current board of directors. This can contribute significantly to creating company strategies and decisions. In addition, this study states that ‘independent directorships balance management’s control while expanding the board’s vision, achieving a diversity of decision-making interests.’ 

Credibility  

Having an independent director safeguards the interests of investors, stakeholders and the public, thus adding credibility to the company. The same study states that independent directors with no ties to the company can help reduce insider control on the board, enhance supervisory function and reduce overlap between decision-making and operating powers. 

Governance Insights

They can focus on supervising the company’s performance and actively mitigate risks, which can enhance and lead to more robust governance practices. They may improve corporate governance through active risk management and ensuring the company complies with laws and regulations. 

Bolder Group Directorship Services

Choosing an independent director with the right experience and expertise can add significant value to your business. Bolder Directors and Officers are corporate governance experts who can provide a deep understanding of your company’s regulatory and operational needs. Contact our team to learn more about our directorship services. 

Disclaimer: Bolder Group does not provide financial, tax or legal advice and the information contained herein is meant for general information purposes only. We strongly recommend that before acting on any of the information contained herein, readers should consult with their professional advisers. The Bolder Group accepts no liability for any errors or omissions in the information, or the consequences resulting from any action taken by a reader based on the information provided herein.

Bolder Group refers to the global network of independent subsidiaries of Bolder Group Holding BV. Bolder Group Holding BV provides no client services. Such services are provided solely by the independent companies within the Bolder Group which are each legally distinct and separate entities and have no authority (actual, apparent, implied or otherwise) to obligate or bind Bolder Group Holding BV in any manner whatsoever. The operations of the Bolder Group are conducted independently and have no affiliation with third party financial, tax or legal advisory firms or corporations.