Board Understanding Of Risk Management ‘Insufficient’, Claims ACT

The Association of Corporate Treasurers (ACT) has made an ‘uncompromising’ response to the Higgs consultation document on non-executive directors. The Association said UK treasurers advocate a rigorous approach to the issues around the independence of non-executives: ‘Within the unitary board, the position of the independent non-executive is vital and there should be a more rigid definition of ‘independent director’; the Chairman should be an independent non-executive director, as should the majority of the board; and the exception in the Combined Code, which permits the roles of Chairman and Chief Executive to be held by one individual, should be abolished.’ The ACT supports the concept of independence used in the Combined Code, that non-executive directors ‘be free from any business or other relationship which could materially interfere with the exercise of their independent judgement’, but go further in requiring that they be ‘independent of management’. Individuals associated with suppliers, such as financial institutions, should not be regarded as independent – a point which has not been accepted sufficiently widely.


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