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“Any director who thought that, once the world entered post-pandemic mode, things would settle down and life would be easier – will be well and truly disabused of that notion by now.”
Corporate partner Roger Wallis was commenting on the launch of our latest Trends & Insights publication analysing corporate governance in New Zealand.
“Rampant inflation after decades of relative price stability, reform across almost every institution of government, new reporting requirements in prospect for both climate change risk and modern slavery, the list goes on...
“All will demand attention at board level, requiring boards to continue to play their best game rather than take some much needed downtime after the stresses of managing their organisations through the disruption created by COVID-19,” Wallis said.
The intensity of change experienced over the last few years has underlined the need for law reform – a need made painfully evident by the recent Debut Homes and Mainzeal litigation.
It is not all doom and gloom for directors and boards. Chapman Tripp's New Zealand Corporate Governance – Trends & Insights 2022 provides a glimpse of some positive improvements.
These include the review by NZX of aspects of its Corporate Governance Code, focusing on factors affecting independence of a director.
“Context is everything”, says Wallis.
“A determination by a board on a director’s independence should take into account the full nexus of that individual’s relationships and whether they might compromise their ability to bring an independent perspective to conflicts should they arise.
“The evaluation should include length of service, but not in a mechanistic sense. A director who has held office for 15 years will have a depth of experience and institutional knowledge, so should not be automatically disqualified from being an independent director, especially if the rest of the board and the management team are relatively new.”
Our analysis, first published in 2017, tracks developments in the board composition of the NZX Main Board Top 75. Over that time, there has been a trend showing more gender balance and shorter average director tenure. There is minimal evidence, so far, of broader social and ethnic diversity.