Independent Board of Directors

This question probably won’t come up, but why do you want 75% independant directors? If I owned 40% of the company, I would probably want representation roughly around there. Is is for the small shareholders so that I can’t use my influence with 40%?


Board of directors typically dont own large portions of the company. They only direct the company for a nominal fee. In an ideal situation board has no stake in the company at all; just a salary.

That just sounds kind of strange to me. As an owner you now hire a director who then hires someone else to run the company. You are adding more layers to the agent problem.

I suppose you just hope you hire good/ethical directors to represent you even though they have no stake in the company.

it’s rare that you will have a shareholder with more than 10% stake in a hole companie.

normally you have so many shareholder with below 0.1% of the equity that 75% independ member makes alot of sens.

best corp governance are more a large cap world kind of things.

if you have 70% of the share, your will vote what ever you want to vote anyway. you wanna be the CEO, then vote for it it’s you companie.

well that doesnt happens when market cap of CIE is above 1 or 2 billion dollar.

Hi guys :wink: Stupid question, but came to me 2 days before the exam :slight_smile: Dictionary is not helpful in this matter, as different editions state this in different ways. I always thought are two organs in companies - Board of Directors and Supervisory Board . Is the way that CFA presents this matter - managements is this first organ, or we have 3 different layers - managers, directors, supervisors ? :slight_smile: sorry for stupid question, the closer to real exam, the more foolish questions come up in my head :slight_smile:

Any1? :wink:

… never heard of a Supervisory Board. If any, you have auditors, SEC, etc, but that’s about it.

No way, Board of Supervisors?:> Wasn’t it Level 1 topic?:slight_smile: