A FTSE SMALL CAP Group Counsel & Company Secretary writes...
I have a couple of questions about a listed company director (non-executive) who is associated with a significant shareholder in the company (i.e. appointed with the agreement of the board at the request of that shareholder):
- UKCGC Provision B.1.1 states that a director is not independent if the director “represents a significant shareholder” – is there any guidance as to what “significant” means in this context – so could a director be non-independent (because the shareholder they represent has a “significant” holding in the company) but then become independent with the passage of time if that shareholding reduces to an “insignificant” level and stays there?
- If a listed company has a non-independent director who represents a significant shareholder, then are there any particular consequences to be aware of? Should the company put in place a protocol or agreement with the shareholder to ensure that the director maintains confidentiality and ensures all shareholders are treated equally etc? What do companies typically do in these circumstances? (ignore for these purposes the provisions regarding a “controlling shareholder”)
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