CMF issues guidelines on appointment of independent directors to avoid conflicts of interest

Tunis: The College of the Financial Market Council (CMF) has issued a set of reading guidelines in order to overcome difficulties in the application of certain provisions of General Decision 20 of March 20, 2020, which establishes the criteria and procedures for the appointment of independent members of the board of directors and the supervisory board, as well as the representative of minority shareholders. According to a press release issued by the CMF on Tuesday, the guidelines issued by the college, which met on January 30, 2024, concerned the prohibition of service providers, suppliers or customers of the company concerned from standing for election as independent members of the board of directors and the supervisory board and as representatives of minority shareholders. In the case of suppliers and customers, the CMF Board specified that the prohibition applies to a customer or supplier that is "significant to the company or its group" or "for which the company or its group represents a significant pro portion of the business". Thus, the materiality of the relationship must be related to the size of the volume of business with the company in question. This prohibition applies to "consultants and other service providers who are bound by a service contract entered into directly or indirectly with the company (or group), either by themselves or through an intermediary". "The assessment of independence or conflict of interest must take into account the nature of the contractual relationship that the candidate has with the company, meaning whether it is an ongoing relationship or simply a one-off provision of services," the Board pointed out. In all the above cases, the assessment of whether the relationship with the company or its group is material or not, as well as the question of independence and/or conflict of interest, must be discussed by the board of directors or the supervisory board and the quantitative and qualitative criteria used to make this assessment (continuity, economic dependence, exclusivi ty, etc.) must be included in the application submitted to the CMF". With regard to the provision prohibiting any person exercising a professional activity directly or indirectly related to the financial market and/or the dissemination of financial or other information (set forth in Articles 5.8 and 17.7) from standing for election to the aforementioned positions, the CMF clarified that this prohibition should be understood as "not exercising a professional activity directly or indirectly related to the financial market and/or the dissemination of financial or other information at the time of the application". As a reminder, a minority shareholder is any shareholder who individually holds no more than 0.5% of the capital and institutional investors holding individually no more than 5% of the capital. Source: Agence Tunis Afrique Presse