Managing a Business/Non Executive and Independent Directors.
Can both Non Executive and Independent Directors play an active
role during mergers and acquisitions ?.
Company A (Parent, Acquirer, Merger-er) , Company B (Secondary, Acquired, Merged).
Case 1 :
Company A and Company B both have Non Executive and Independent Directors.
Case 2 :
Company A has Non Executive and Independent Directors,
Company B do not have Non Executive and Independent Directors.
Case 3 :
Company A do not have Non Executive and Independent Directors, Company B have Non Executive and Independent Directors.
Awaiting your reply,
Thanks & Regards,
Prashant S Akerkar
Thanks for the question.
By definition the non-executive or independent directors (NXDs) are the individuals who are the members of the board of directors but not in the payroll of the organization. They may work as a freelancer for the organization with proper agreements.
In the case of merger and acquisitions these outside directors play different roles in different firms e.g. In the case of the banks or other financial firms these outside directors play important monitoring role in the governance process. These NXDs follow all the regulations as per the guidelines of the acquisitions and help in the smooth processing irrespective of the fact that the other organization has Executive directors or NXDs.
NXDs are externals only for the company they are associated with and for others they are the regular members of the management team. So it hardly matters if the directors are internal or external in the case of the M&A.
The hiring of these NXDs is the result of the evolution of the outsourcing industry which helps in bringing the different talents under one umbrella.
You can also refer to below link for more details: