Written by: Valentina Ortega Prieto

Board members are elected by the general shareholders' meeting and collectively form the company's administrative body. As a collegiate body, decisions are made by majority vote, making each member’s opinion essential to the decision-making process.

Why is it important to have all board members in place?

Shareholders, based on their ownership percentages, may appoint one or more board members. However, once constituted, the board operates as an independent body within the company, representing the diverse interests of shareholders. Although the board is composed of individuals, it acts collectively, and each member plays a crucial role. Every member represents a particular position and set of interests, ensuring a balance when making decisions. A fully constituted board reflects the different perspectives of the company’s shareholder groups.

When a board loses one or more members, internal voting dynamics shift, affecting the previously established balance of interests. In such cases, an extraordinary general shareholders' meeting should be convened to appoint replacements for the departed members or those unable to complete their term. This helps restore the board’s composition and ensures its proper functioning.

What is an independent board member, and why is their role important?

Under Law 964 of 2005, the boards of directors of publicly traded companies must have at least 25% independent members. However, this requirement may vary depending on the company's bylaws, and some entities may mandate a higher percentage. While not all board members are independent, their presence safeguards the corporate interest against majority shareholders who might otherwise prioritize their own objectives.

Once elected, board members no longer represent the individual will of shareholders but must act in the best interest of the company as a whole. An independent board member is someone who does not have direct or indirect personal, professional, or commercial ties to the company they serve. They have no familial or business connections with any shareholders, allowing them to vote freely within the board, solely pursuing the best interests of the company rather than protecting individual shareholder interests.

Independent board members play a critical role by serving as a counterweight to majority shareholders and protecting minority shareholders. They enhance the board’s functionality and promote balance within the company by ensuring that decisions benefit the company as a whole rather than a specific group of shareholders. This helps prevent excessive control by a single shareholder over corporate governance.

Given their importance, any vacancy in an independent board member position should be promptly filled to maintain the board’s integrity and ensure its continued effectiveness.