– Parameters for assessing independence. The committee should establish a process to assess the independence of committee members, advisers and consultants, and address circumstances that may affect their independence. MI 61-101 sets out several bright-line factors that disqualify a director from being considered independent in a transaction. For example, directors who are themselves interested parties to the transaction, as well as directors who are or have been employees of an interested party or its advisers (in the 12 months prior to a transaction) are disqualified from serving on the special committee. In other instances, MI 61-101 sets out principles on which to make judgments about the independence of potential committee members. Whether or not an issuer is required to comply with MI 61-101, the factors set out in the instrument are useful to consider in assessing the independence of potential committee members. – Committee outputs. The special committee’s mandate should speak to the deliverables expected from the committee, including what decisions it can make versus what must be presented as recommendations to the board for its approval. Most commonly, a special committee is charged with making recommendations to the full board, with the full board in turn being the ultimate approval authority. Generally, the optimum is to have a sufficiently small group that can act quickly and focus on the matters under consideration, while ensuring the members have the requisite skills and experiences needed to bring proper consideration to the various issues.
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Governance Insights 2020
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