The AITC says limits on non-executive directors proposed by the FSA and the Higgs review could damage boards running investment trusts.
At the AITC director conference in London this week, director general Daniel Godfrey said boards could lose their better directors unless amendments are made for trusts.
His main concern was the Higgs review's recommendation that non-executive directors should only serve two terms of three years, which he said would result in the loss of good directors simply because of “some arbitrary sell-by date”.
The loss of continuity and experience could be damaging, Godfrey argued, especially with fund managers switching companies so frequently. He took the FSA to task for stating in its changes to listing rules that directors cannot be independent if they sit on more than one board run by a single management company.
Godfrey said it is not those directors that shareholders should worry about but those who sit on only one board – the type he claimed could be “a complete patsy”. He said a director's position should be made clear in a trust's annual report, enabling shareholders to decide – and vote – for themselves.
He said: “We prefer our approach rather than a strict rule, which we believe would be likely to deprive shareholders of some excellent directors. Our approach would also help give boards a non-confrontational opportunity to weed out those who really have passed their sell-by dates.”
FSA spokesman David Cliffe says: “Multiple directorships give the impression there is a conflict of interest. We are trying to eliminate that perception.”