Boards Dealing with Crisis - Where's Our Interim Board Member?
It’s not like any other ‘regular’ job within a corporate or not for profit. Just ask any of those directors of failed companies who are now being pursued personally by shareholders, creditors or liquidators to contribute to the losses suffered by stakeholders when the company they were a director of failed.
More than ever, being aware of the responsibilities of taking on a director role, the obligations and risks involved, and the consequences of not performing the duties in accordance with regulations is hugely important. It is not a role for the inexperienced.
As a result, more and more boards and shareholder groups, including private equity investors and lenders (who find themselves as shareholders, or have board representation as part of their debt participation), are turning to professional advisors to take on the board role on their behalf. There are many attractions to using interim board directors, but some key drivers include:
- Providing a temporary ‘band-aid’ solution while permanent candidates are found to take the long-term role;
- Providing subject matter expertise directly related to the crisis or company situation, e.g. to drive the turnaround or transformation;
- Providing the shareholder/lender with ‘someone on the inside’ to protect their interests; and
- Providing leadership and coaching for the executive management.
In Australia, the conduct of directors sitting on boards is governed by a range of regulatory bodies including ASIC, APRA, and in the case of public companies, the ASX. Guidelines set out how directors need to perform their role and consider their duties and obligations with respect to the key stakeholders in running a company, namely the shareholders, financial creditors, employees, and the company’s customers and suppliers. Combine these stakeholders with the regulatory bodies, and it very quickly becomes a very long list that directors need to consider while guiding a company through its journey.
September 24, 2018
Corporate Finance & Restructuring
System.Collections.Generic.List`1[FTI.Foundation.Person.Models.IJobTitle] ?? string.Empty