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The Independant director

What is the role of the administrator ? What are the qualities required to be a good administrator? Votre-Administrateur answers your questions.

Role of the administrator

 

If it is true that the role of an administrator, whether he/she be a member of a board of directors or a supervisory committee, can differ according to the organizations, it is nevertheless possible to identify several constants :

1) Representation of interests

  • The decisions which the administrator is called on to take part in are always taken collectively by the board members;
  • He/she acts in the social interest of the company;
  • He/she represents the shareholders and must ensure equal treatment of all shareholders

2) Balance of power

  • He/she acts as a counter-weight when the functions of chairman of the board of directors and those of the general management of the company are not dissociated.

3) Support of strategy

  • He/she studies and validates the strategy of the company, assesses the risks, closes the accounts, selects the auditors and decides the remuneration of the management.

4) Guarantee of information

  • He/she ensures that the information compiled for the shareholders and the market is transparent and a faithful representation of reality.

 

Note : In France there is no legal definition of the role of the administrator, but his/her obligations are set out by law.
The role of an administrator is thus carried out within a framework which includes rights and obligations.

The rights :

The administrator has access to all information necessary for the accomplishment of his/her mission. If he/she judges that the information supplied is insufficient, he/she is within his/her rights to require of the management that the missing elements be made available. The law – law NRE, article L225-35, paragraph 3, of the code of commercial law – specifies that the management of the company must “give each administrator all the documents and information necessary for the accomplishment of his/her mission”.

In addition, according to his/her competencies and the various committees which exist within the organization where he/she holds a mandate, the administrator may also be a member of a special committee. The special committee, considered as an emanation of the board, can concern finance and audit, remuneration, appointments and strategy, among the most common. To know more…

 The obligations :

The law in France:

  • Limits concurrent holding of mandates see Key Question, question 8
  • Administrators have a duty to exercise discretion concerning any confidential and privileged information given to them.
  • Loyalty : this obligation covers regulated agreements and conflicts of interest.

The recommendations of French government Afep-Medef codes and MiddleNext rely on law and go further. No know more…
Finally they encourage administrators to be diligent, involved and informed.

Qualities of the administrator

Given the importance of the administrator’s role in the governance of an organization, he/she must both have recognized know-how and display exemplary life skills.

More; “competency is more than mere knowledge or know-how. It mobilizes “intelligence” and “initiative”. (Zarifian, 1999)

 All these qualities allow an administrator to carry out fully the missions he/she has undertaken :

  • To question with kindness
  • To advise
  • To check
  • To decide

More generally it is expected of an administrator that he/she should be a partner with independent judgement. In the case of a difference of opinion within a Board or a specialized committee, it is his task to seek the best compromise to serve the company project and its social interest. From this point of view, the administrator is an ally of management.

The different types of administrator

In the same way that the choice of an administrator depends on the need expressed by each organization,there can also be within one organization several types of directors (independent or not, referent, non-voting member etc). If they all have in common the mission of acting in the social interest of the company, their characteristics differ.

 

Votre-Administrateur presents the different types of administrator.

1) The independent director. Is characterized by the fact of having no link of any kind with the company in which his/her mandate is exercised. To know more…

2) The non-independent director. Is called non-independent because he/she can be :

  • A shareholder
  • A corporate entity representing a group of shareholders
  • An individual representing his/her company or a specific shareholder
  • An executive of the company
  • A company officer (CEO, GM)
  • A person having a work contract within the company

3) The senior independent director or vice-president. Generally acts as guarantor of good governance and relations with shareholders. The senior independent director is often present in organizations which do not dissociate the functions of Chairman of the Board and those of the executive branch.

4) The non-voting member. With no voting rights, the role of this director is variable.

5) The administrator representing shareholder employees, whose presence is mandatory when shareholder employees of a listed company hold at least 3% of its share capital. This type of director is also obligatory in nationalized and private companies.

6) The adminstrator representing employees, is elected by his/her peers and must resign from any trade union mandate within 8 days of this election.

Some independant director profiles