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Corvane plc proposes appointing Ilse as an independent non-executive director. Ilse is a partner at the law firm that earns about 30% of its fees from Corvane, she served on Corvane's board for 11 years before stepping down last year, and she holds no shares. Applying typical governance code independence criteria, which statement is the most accurate?

Ilse's independence is doubtful. Her law firm earns a material share of fees from Corvane, and she recently served on the board for eleven years, both standard indicators of compromised independence. Holding no shares does not remove those concerns, and being a non-executive does not automatically make someone independent.

  1. AHer independence is doubtful because of the material business relationship and her recent long service on the board, either of which would raise concernCorrect
  2. BShe is independent because she holds no shares in the company
  3. CShe is independent because non-executive directors are by definition independent
  4. DHer independence is doubtful only because she is a lawyer

Explanation

Independence criteria look at material business relationships with the company and length of service (usually nine years or more) and recent board or employment links. Ilse's firm depends on Corvane for 30% of fees and she was a long-serving recent director, so two separate indicators undermine independence. Having no shareholding does not cure these, and her profession is irrelevant.

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