The minimum acceptable proportion of independent
directors on boards in the region is less than elsewhere
and the independence tests are not so rigorous. For
instance, certain regional banks classify as ‘independent’
directors some who have been nominated to the board by
major shareholders.
Whereas elsewhere best practice would suggest that
chairmen of boards should be independent when
appointed to that position5, this is very frequently not
the case in the region due to the common association of
new chairmen with leading shareholders or with other
connected parties.
Best practice elsewhere is that only non-executive
directors who pass stringent independence tests should
be members of board audit, risk and remuneration
committees. This restriction is not always followed
in the region although executive membership of these
committees is readily avoided, not least due to the small
number of executives with board positions.
The relative weaknesses of independence arrangements
in the region can perhaps be defended on several grounds.
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