Legal status of an independent board member: A comparative perspective between the legal position in Kuwait and USA

Abstract

While there is no clear definition of what corporate governance is, corporate governance principles can be described as an intervention in the management of a company. Every listed company must have a board of directors. One of the most important corporate governance principles is to strengthen the board composition by having an independent director. This article deals with one of the most important issues related to corporate governance of Kuwait's main securities market: having independent directors on the board. Corporate governance as it relates to listed companies is sensitive to economic, social and political variables. Consequently, the 2015 Kuwaiti Corporate Governance Code (KCGC) raises a number of questions. For example, what requirements should list companies follow when appointing independent directors? To what extent are listed companies obliged to apply it in present circumstances? Finally, can practical solutions be found that will satisfy the parties concerned? In discussing the role of independent director in KSE, this paper will compare the provisions of corporate governance in the New York Stock Exchange (NYSE) and those in Kuwait Stock Exchange (KSE). This article will be underpinned by a comparative legal analysis of the NYSE relating to corporate governance in an effort to improve the KCGC. Keywords: independent director, corporate governance, Kuwaiti Stock Exchange, New York Stock Exchange