Over the past week, much attention has been focused on independent directors. There should be no misperception or misreading of the role these directors are expected to play. It involves a fiduciary duty that must be executed or else one falls foul of the law. In a 2011 High Court ruling, the presiding judge was crystal clear, stating in no uncertain terms that “An independent director is not a decorative ornament ... and has a role in governance”. There are no two ways about it. According to Bursa Malaysia Listing Rules, an independent non-executive director is defined as a director who is independent of management and free from any business or other relationship that could interfere with the exercise of independent judgement or the ability to act in the best interests of a listed issuer. In the current climate of the continuing evolution of shareholder activism, a company’s board of directors carries the heavy burden of governance that ensures a duty of care is observed. This reflects the depth of expectations in relation to governance that is placed on directors, more so on the shoulders of independent directors. Being independent of management, serving in the best interest of the listed issuer is of paramount importance. This includes, among others, attestation to the veracity of published financials and oversight of non-financial issues relating to the environment, governance and corporate social responsibility. They are not acting in the “best interests” of the corporation they serve if they are silent about non-adherence to regulations and/or questionable management practices. This is where the integrity and character of independent directors are thrust into the forefront, as not all issues affecting the efficacy of a company’s operations can be legislated.

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