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Independent Directors

Independent Directors

  • Term

    Main definition

  • Independent Directors

    A member of a board of directors who has no material financial ties or affiliations with either the company, company insiders (i.e., founders or management) or outside investors that effectively control the company. SEC rules and stock exchange rules (if applicable), investor rights agreements, voting agreements, and charter provisions may require the election of one or more independent directors (typically designated by the investor(s) and reasonably acceptable to the founders and other common stockholders). For public companies, SEC and stock exchange rules provide rather elaborate, detailed definitions and requirements regarding the number and qualifications of independent directors. 

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