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Advice from Outside the Square

Monthly Archives: August 2013

The Use of Independent Directors in an Indigenous Corporation (Part 1)

directorsThere has been significant attention paid to governance in the last few years, as more and more Native Title Prescribed Body Corporates are incorporated, and the tide has turned from welfare-based Government funded Australian Indigenous organisations towards well-run Not for Profit entities and social ventures seeking the philanthropic dollar. This is only right because governance underpins the development of modern Aboriginal corporations as these seek to make a sustainable and resilient existence in the “mainstreaming” of their services. In my work where I advise, guide, help plan and facilitate the business of Indigenous Boards, I have seen this attention on governance leading to a trend to appoint “Independent Directors” to the Boards of PBC’s and Australian Indigenous NFP’s. The question however is whether the emphasis on governance equates to a need to appoint Independent Directors, and what should be the criteria used to select them? Firstly we should define the term. In actual fact, all Non-Executive Directors (those Directors who are not employed by their corporations in an operational or executive capacity) are “independent”. That is, they are “independent” of management. Indeed the legal fiduciary duty of all Directors, including Executive Directors, includes the duty to act for the good of the company, and not for any group, family or interest they represent,...
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