Good Governance Guide
Board composition
Composition of a board will vary greatly depending
on the size, type and complexity of the company.
Generally, it is considered good governance for the
chairman of the board to be a non-executive director
and the role of chairman and CEO to be split. The
following matters should be addressed in considering
the composition and renewal of a board:
the desired size of the board (reference needs to
be made to the companys constitution)
the balance between executive and non-executive
directors, giving consideration to the independence
of directors (the ASX Corporate Governance
Councils Corporate Governance Principles and
Recommendations are a good reference, including
for non-ASX listed companies, in this regard)
specific role and responsibilities of the board (see
the section on different types of company below);
skills and experience required of directors, collectively
and individually, as well as personal attributes and
diversity requirements a skills and experience
gap analysis and the development of a skills set and
experience matrix is recommended. Consideration
needs to be given to whether it would be more
appropriate to invite experts with particular skills,
qualifications and knowledge to attend meetings
and brief directors on particular matters rather than
appoint individuals with those skills, qualifications and
knowledge as directors
whether there are any regulatory requirements to
be met prior to a director being appointed (eg, APRAs
fit and proper standards; requirements in other
jurisdictions if the company is dual-listed or has
foreign subsidiaries)
what board committees are in existence and any
particular skills or experience that are required for
those committees (eg, financial qualifications may
be required for the audit committee)
the boards expectations of a director, including the
expected time commitment and desired behaviours
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
potential conflicts of interests that may arise with
respect to possible candidates and how they will
be managed (eg, directorships with partners in joint
ventures) see Good Governance Guide: Conflicts
of interest and related party transactions
policy and procedures for the selection and renewal of
directors see Good Governance Guides: Matters to
consider in the selection and nomination of directors
the pool of director fees available and the level of
individual fees that is available to be paid
whether a consultant should be engaged to source
candidates and what the criteria should be in
selecting candidates.
However, the specific circumstances of different types
of organisation may necessitate different considerations
applying to looking at the composition of the board, as
the board and company may have different legislative or
other regulatory requirements. Examples of this include:
listed companies (small or large)
stand-alone companies (public or proprietary)
subsidiaries within a corporate group
IPOs
joint ventures
family-run companies
government-owned corporations
trustee companies
companies limited by guarantee and membership
organisations such as clubs and trade associations.
Listed companies are encouraged to refer to the ASX
Corporate Governance Councils Corporate Governance
Principles and Recommendations for additional
guidance on board composition.
For larger companies, a separate nomination committee
should be constituted to formulate a policy for board
composition, renewal and evaluation. Companies with
small boards which are unable to constitute a separate
Good Governance Guide Board structure

nomination committee should explain in their corporate

governance statements how they deal with the matters
normally dealt with by a nomination committee. They
may find it beneficial to focus the boards mind on
these issues by closing the board meeting and having
the board reconvene as a nomination committee with
a separate agenda and minutes see Good
Governance Guide: Nomination Committee.

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.