CIMA BA4 · Chapter 6 · Question 4 of 10
Which of the following would most likely cause a non-executive director to be regarded as NOT independent?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) He was an executive employee of the company until two years ago
Explanation
Governance codes treat recent employment by the company as a circumstance likely to impair independence, because the director may be too close to current management; the UK Corporate Governance Code, for example, refers to having been an employee of the company within the last five years. Holding other unrelated roles, receiving a fixed fee and having industry experience do not of themselves impair independence.
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