A board should be structured so there is a balance between executive and non-executive members, there is a majority of non-executive directors, and there is at a minimum a critical mass (at least two for a smaller board) of independent directors.
Australian law does not stipulate ratios of executive to non-executive directors. However, the Corporate Governance Council Principles and Recommendations state that a majority of the board, including the chair, should be independent directors.
Executive directors usually carry out executive functions in the management and administration of the company. Non-executive directors are usually independent of corporate management. The role of independent, non-executive directors is encouraged on a board.
Independent directors are those who have not been employed as an executive by the company, have not recently been a partner, director or senior employee of a business providing services to the company, are not substantial security holders in the company, and do not have a material business relationship with the company or a related company.
