Quest for independent directors: Special reference to their legal position in the United Kingdom

• Published in: Pertanika Journal of Social Sciences and Humanities
• Main Author: Razak M.U.A.; Adam Y.C.; Mahali M.
• Format: Conference paper
• Language: English
• Published: Universiti Putra Malaysia 2017
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85036651115&partnerID=40&md5=5d56c9b00d73a71db11db8b47e476e9d

The purpose of this research is to analyse current legislation and policies in relation to the appointment of independent directors in Malaysia and to compare their position with that of independent directors in the United Kingdom. Although a board of directors may have a good mix of executive and independent non-executive directors, its independent non-executive directors are often seen to be clearly ineffective, highlighting the fact that ensuring 'independence' of directors is a continuous process and a director's categorisation as 'independent' does not ensure that he is actually independent. The existing literature does not demonstrate a definitive relationship between board composition and corporate performance. This research employs qualitative research methodology, and the authors have conducted a comparative study by referring to the legal position of independent directors in the United Kingdom to determine whether the existing definition of independent director as applicable in Malaysia needs review. The hypothesis of this research is that there is lack of clear definition of what constitutes an 'independent director' in Malaysia. This paper finds that the definition of 'independent director' in Malaysia can be considered at par with that of independent directors in the UK at the current time. © Universiti Putra Malaysia Press.