corporate governance Essays - Corporate Governance, Business

corporate governance Essays - Corporate Governance, Business As reported in ABC's Corporate Governance Report, two independent non-executive directors have been appointed to the audit committee and a third member is being actively sought. From our research, however, the invitation of independent directors should be done by a securities commission instead of the Chairman to provide independent objective view and fulfil duties effectively as they are independent from the management. According to Securities Commission (2000), the term independent generally refers to two vital parts - independence from management and independence from a significant shareholder. A non-executive director is not a part of management. Even though, they are not a full-time director, they can attend board meetings and contribute his expertise to the board. It was also clearly noted that a non-executive director may not necessarily be independent in that he could have business and management arrangements with the corporation or other relationships including family relationships with other directors. A truly independent director should not be involved in the day-to-day running of the company's business or indeed, be involved in management. He should be free from any business or other relationships which could interfere with the exercise of independent judgement or the ability to act in the best interests of the corporation. The independent director has a crucial role in ensuring that the board is an effective board and through which good corporate governance can be promoted throughout the entire company. Among other things, the independent director is expected to provide a balanced and independent view. Securities Commission (2000). Malaysia Code of Corporate Governance. Kuala Lumpur, Malaysia: Perpustakaan Negara Malaysia