Independent Director (Consejero Independiente)

Independent Directors in Spanish Corporate Governance

The independent director (consejero independiente) is the key figure in modern corporate governance. Unlike the executive director (who also runs the company) or the proprietary director (who represents a significant shareholder’s interests), the independent director brings objective perspective, external experience, and critical capacity unconditioned by prior relationships with the company or its shareholders.

The figure was developed in Spain through successive CNMV Corporate Governance Codes (Olivencia 1998, Aldama 2003, Conthe 2006, and the current 2020 Code), which have progressively increased independence requirements for listed company boards.

Three Core Roles of Independent Directors

Chairing Board Committees Independents chair the audit committee and hold majority representation on nomination and remuneration committees. Their role is to ensure that decisions on these sensitive matters are taken on objective criteria and are not influenced by executives or reference shareholders.

Supervising Executive Management Independents are best positioned to objectively evaluate senior management performance, challenge projections presented by management, and recommend changes when results are unsatisfactory. They provide the critical voice that executive-dominated boards lack.

Protecting Minority Shareholders In companies with reference shareholders, independents provide the counterweight preventing the controlling shareholder from extracting value at the minority’s expense. They are particularly relevant in related-party transactions and M&A transactions where the reference shareholder is a counterparty.

Value for Unlisted Companies

For unlisted companies — including medium-sized family businesses professionalising their governance — incorporating one or two independent directors with relevant sector experience has documented positive impact: it improves strategic decision quality, facilitates bank financing (lenders value the presence of independents), and prepares the governance structure for a potential IPO or private equity entry. Family businesses that separate ownership from management by bringing external directors onto the board consistently show better longevity and succession outcomes across generations.