Potential directors should carry out due diligence of firms
William Fry managing partner Myra Garrett tells corporate governance conference those considering taking up an executive or non-executive director position should do their research
Myra Garrett, managing partner of William Fry: “Sometimes directors are so thrilled to be offered the position they’ll rush in without doing due diligence.”
People should do due diligence before accepting director positions on company boards, a corporate governance conference has heard.
William Fry managing partner Myra Garrett said those considering taking up an executive or non-executive director position should do their research and check whether there is sufficient financial expertise at the firm, a strong audit committee, who the chairperson is and whether the board culture facilitates constructive challenge.
“Sometimes directors are so thrilled to be offered the position they’ll rush in without doing due diligence. As a director though, you are taking on potential personal liability,” said Ms Garrett, who is also a director of the Road Safety Authority.
She said companies go to great lengths to find suitable candidates, identifying the skills they need and often engaging with recruitment and executive search firms.
Research on candidates
Companies do their research on candidates so candidates should do the same, she said, adding “once you become a director it can be very difficult to resign or step back in the first few months”.
Earlier the conference heard of a greater need for boardroom diversity to prevent group-think, improve corporate performance and reputation and encourage better use of the talent pool.
Boards should consider whether nominations and appointments are made on pre-established, neutrally formulated and unambiguous criteria, and the manner of implementation of diversity policies.
Mason, Hayes & Curran partner Paul Egan discussed the issues surrounding compliance obligations, warning directors can be fined, imprisoned, disqualified or liable for debts if they breach market abuse laws, insider dealing laws, fail to keep proper books of account or engage in reckless or fraudulent trading.