board independence - Investment & Finance Definition
A relatively new concept in corporate governance that calls for a majority of board members to be independent from the company. Independence occurs when a board member has not been and is not currently employed by the company or its auditor and the board member’s employer doesn’t do a significant amount of business with the company. Each company creates its own definition of significant. Board independence was given legal definition and direction in 2002 in the Sarbanes-Oxley legislation. Stock exchanges, such as the New York Stock Exchange and the NASDAQ also passed their own rules governing the behavior of their listed companies.Webster's New World Finance and Investment Dictionary Copyright © 2010 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.