Essential Criteria for Appointment of Non-Executive Directors to the Board

Corporate Governance

MEMO
TO: Board of Directors
FROM: Management Consultant
DATE: 19th July 2018.
RE: Essential criteria for the appointment of the non-executive directors to the board
The company is required to abide by the requirements as stated in the Corporations Act, 2001
(Cth). In addition to this, the company being the listed company falls within the framework of
Corporate Governance Principles, laid down by the ASX Corporate Governance Council and
the related recommendations (Lester, Yoon and Lovells, 2017). Appointment of non-
executive directors is a sign of good governance (Australian Institute of Company Directors,
2018a).
As the non- executive directors are appointed to strengthen the board of the directors in terms
of independent management, diligent policy formulation and planning; the current board’s
competencies and qualities must be assessed (Australian Institute of Company Directors,
2018b). This should be followed by developing a selection criterion for the individual in
terms of education, experience, and diversity policy. The candidate should also give his or
her consent for the said appointment.
The directors or the shareholders must pass the resolution appointing the non-executive
director (Du Plessis, Hargovan and Bagaric, 2011). In case the directors pass the resolution,
the same is required to be confirmed by the shareholders through a resolution in the next
annual general meeting of the company. The term of the appointment would be maximum of
three years.