Six Questions to ask on Conflicts of Interest and Independence

The independence of a board of directors is essential to the proper functioning of a public company. Conflicts of interest among directors can compromise this independence and negatively impact the interests of shareholders. To ensure the board's independence, public companies should have policies in place to identify, manage and disclose conflicts of interest among its members.

Here are six great questions you can ask a Public Company

• Can you explain why there are not more outside directors on the company's board and if there are plans to increase their representation or decrease the number of inside directors
• Can you explain why management is represented on the board of directors and how their representation would be handled in the event of a conflict of interest with shareholders?
• Is there any representation of major lenders on the board of directors? Are their interests different from the shareholders?
• Are there any venture capital firms represented on the board of directors? If so, are their interests different from the interests of other shareholders?
• Are there any directors who are immediate family members, friends or personal business associates of the CEO? Are there any immediate family members of the directors employed by the company?
• Are there any situations where executives of the company also serve as directors of an affiliated entity? Are there any potential conflicts of interest for any directors because of their membership on other boards? Does the company have a policy for disclosing conflicts of interest for its directors and officers?

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