Matters to consider in the selection and
nomination of directors
Board structure
It is considered good governance for the board of
directors to regularly assess the composition and
effectiveness of the board as a whole, as well as any
upcoming need for new directors, which will include a
review of the required mix of skills, experience and other
qualities of directors.
• The committee should develop a process
for interviewing the candidates and making
recommendations to the board. The curriculum vitae
(CV) of the candidates should be circulated to the
board. The board may also be given the opportunity
to interview selected candidates.
• The board should develop a documented process for
reviewing external and internal director nominations.
• The committee should also develop a process for
appropriately reviewing self-nominated or non-board
endorsed candidates.
• A nomination committee of the board is commonly
constituted for this purpose and will meet as required
to review and seek suitably qualified persons when
a board vacancy occurs or is anticipated or required
as a result of a review of board skills — see Good
Governance Guide: Nomination committee.
• Consideration needs to be given to the guidance
on nomination committees provided in the ASX
Corporate Governance Council’s Corporate
Governance Principles and Recommendations,
including the guidance on committee composition
and the transparency of the selection and nomination
process.
• Taking into account the most recent evaluation of
the board, the criteria for assessing the skills and
experience required for the board developed by the
nomination committee and any requests from the
board, a suitable panel of potential directors will be
prepared. The board may consider maintaining a
register of potential candidates on an ongoing basis,
so that there is an understanding of the market and
candidates and to enhance the efficiency of the
search process when a new director is required.
• Consideration needs to be given as to whether the
use of a search consultant to identify potential new
directors is appropriate. The purpose of appointing
a search consultant is to ensure access to as wide a
selection of candidates as possible. The documented
preferred characteristics of the successful candidate
are provided to the consultant, who is asked to seek
out candidates, conduct interviews and provide a
shortlist to the nomination committee.
• Factors to be taken into account when making a
suitable recommendation should include the skills,
experience, personal attributes and diversity required
of directors, both collectively and individually, as well
as their availability and other directorships.
• Directors nominated and appointed to fill casual
vacancies or as a result of a review of board skills
must stand for election at the next annual general
meeting (subject to the company’s constitution).
• The terms of the company’s constitution, the
governing legislation (for example, the Corporations
Act), and any pre-appointment requirements (for
example, APRA’s fit and proper purpose test) related
to the appointment of directors must be confirmed.
In considering the appointment of directors, the
nomination committee should have regard to the
succession of the chairman on an ongoing basis.
Depending on the size and structure of the organisation
and the industry it operates in, potential new directors may
be invited to attend one or more board meetings prior to
being offered a formal board position, to meet with other
directors and to see how the board operates in practice.
Consideration needs to be given by both the board
and the individual of the management of any potential
issues that may arise from the attendance, including
the confidentiality of the information discussed (and
associated insider trading considerations), the liability
of the individual if they participate in any decision
making and other issues arising from any matter
discussed at such meetings that become the subject
of legal action.
© Governance Institute of Australia 2014. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.
Board structure
Good Governance Guide
Good Governance Guide
Board structure
See also Good Governance Guide: Letters of
appointment for non-executive directors: suggested
contents; Good Governance Guide: Appointment of
alternate directors; and Good Governance Guide:
Director induction packs: content.
© Governance Institute of Australia 2014. This material is subject to copyright. The Good Governance Guides indicate, in the view of Governance Institute
of Australia Ltd, one interpretation of good practice. They are not designed to cover or comply with all applicable legislation or case law. We cannot be held
liable or accountable to any person who acts or relies upon the information provided. The guides are not a substitute for professional advice.
Visit our website at governanceinstitute.com.au to find more Good Governance Guides and information on governance.