UpFront
APPOINTMENTS
Directors’ leave of absence dilemma
Carl Carrington Chartered Member, has joined the board of Mt Cook Alpine Salmon Ltd.
A lack of clarity around directors’ personal liability while on extended leave means they’re more likely to resign than take leave of absence. This diminishes New Zealand’s pool of strong, experienced directors and potentially poses a challenge to board diversity, according to Should I Stay or Should I go?, our recent paper released in association with MinterEllisonRuddWatts.
Carol Cheng Chartered Member, has been appointed to the board of merged council-controlled organisations Regional Facilities Auckland (RFA) and Auckland Tourism, Events and Economic Development (ATEED).
“There is nothing to stop a director requesting leave of absence when they need extended time off, whether for parental or health reasons. However, New Zealand’s law does not explicitly address the process, nor what happens when they take such leave. A director is not automatically absolved of personal liability if something goes wrong in the organisation while they’re absent,” says MinterEllisonRuddWatts Partner and Head of Corporate, Silvana Schenone. “The onus would be on them to defend themselves against liability, if it came to that,” Schenone says. “And with recent high-profile court decisions putting directors’ duties in the spotlight, and liability insurance becoming costlier and harder to come by, directors will be particularly wary of the risks.” When faced with the dilemma, many directors will take the “safe” option and simply resign, with no promise of a role when they are ready to return. This has important implications for the strength and diversity of our governance talent pool, according to the IoD’s Principal Governance Advisor Selwyn Eathorne.
Toni Kerr Member, has joined Raukawa ki te Tonga AHC Limited (AHC) board as a non-executive director. Rod Snodgrass Member, has been appointed to the board of investment company Forsyth Barr. Ross Buckley Chartered Member, has joined the board of ASB Bank Limited.
“The issue is not limited to women who have or plan to have children. However, they are by far the largest cohort who are likely to seek extended leaves of absence. If directors do not feel there are structures in place to support such leave, they may be compelled to hang up their governance hats, taking their valuable skills and experience with them – possibly to never return,” Eathorne says. “New Zealand’s future wellbeing and prosperity relies on a diversity of highly skilled and experienced individuals choosing to serve as directors,” Eathorne says. “They should be actively encouraged, not deterred.” Read the full report at iod.org.nz 4
BOARDROOM
