The 12 elements of independent judgement for a UK board: A guide for directors

The 12 elements of independent judgement for a UK board: A guide for directors

Of interest to all involved in governance

Summary


This booklet is to help directors interpret what independent judgement means in practice with practical guidance illustrated by examples. It may also help to assure them and others that a process has been appropriate. The twelve elements of independent judgement include four on what goes into the ‘raw material’ of choices, four on attitudes and feelings in making those choices and four on the process of choosing. As practical guidance, it does not interpret the law or supplant the UK Corporate Governance Code, published by the Financial Reporting Council.

Introduction


Directors of UK companies – big and small, listed and unlisted, for-profit and not-for-profit – are required by the Companies Act to exercise independent judgement. This may come as a surprise. There are many who assume that the requirement applies only to independent non-executives of listed companies.

Coverage


For the full board and its committees. Although designed for UK board directors, it could also prove useful for good practice in corporate governance and for those directing other kinds of organisations.

How the 12 elements can be used


For the induction of someone who has never been a director, whether executive or non-executive; for chairs and board members in the process of making choices; in board appraisal and Board reviews for identifying areas for improvement. The 12 elements are intended to be helpful guidelines, not to be prescriptive, interpret the law or supplant the UK Corporate Governance Code. Following them will help with independent elements of judgement, not on judgement as a whole (a much broader concept which covers matters such as the feasibility of strategy, the quality of financial planning or human resource policy).

This document includes:

  • The twelve elements explained
  • How to improve independent judgement
  • What is ‘independent’
  • What is ‘judgement’
  • Where the 12 elements of independent judgement come from
  • How the 12 elements can be used

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