HC-1.4 HC-1.4 Independence of Judgment
HC-1.4.1
Every director must bring independent judgment to bear in decision making. No individual or group of directors must dominate the board's decision-making and no one individual should have unfettered powers of decision.
October 2010HC-1.4.2
Executive directors must provide the board with all relevant business and financial information within their cognizance, and must recognise that their role as a director is different from their role as a member of management (see HC-2.3.2).October 2010HC-1.4.3
Non-executive directors must be fully independent of management and must constructively scrutinise and challenge management including the management performance ofexecutive directors .October 2010HC-1.4.4
Where there is the potential for conflict of interest, or there is a need for impartiality, the Board must assign a sufficient number of independent Board members capable of exercising independent judgement. At a minimum, all locally incorporated banks must appoint one independent director.
October 2010HC-1.4.5
At least half of a
conventional bank licensee's board should benon-executive directors and at least three of those persons should beindependent directors . (Note the exception for controlled companies in Paragraph HC-1.5.2.)October 2010HC-1.4.6
The chairman of the board should be an
independent director , so that there will be an appropriate balance of power and greater capacity of the board for independent decision making.October 2010HC-1.4.7
The Chairman and/or Deputy Chairman must not be the same person as the Chief Executive Officer.
October 2010HC-1.4.8
The Chairman must not be an Executive Director.
October 2010HC-1.4.9
The board should review the independence of each director at least annually in light of interests disclosed by them, and their conduct. Each
independent director shall provide the board with all necessary and updated information for this purpose.October 2010HC-1.4.10
To facilitate free and open communication among
independent directors , each board meeting should be preceded or followed with a session at which onlyindependent directors are present, except as may otherwise be determined by theindependent directors themselves.October 2010HC-1.4.11
Where an
independent director has served three consecutive terms on the board, such director will lose his/her independence status and must not be classified as anindependent director if reappointed.Added: January 2020HC-1.4.12
Where a Chief Executive Officer of a Bank, who is also a Board member, no longer occupies the CEO position, whether due to resignation, retirement or termination, his/her Board Membership must also be immediately terminated.
Added: January 2020
