Keyword Analysis & Research: interlocking directorate


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Frequently Asked Questions

What is an example of interlocking directorate issue?

For example, if a firm purchases another company and a director or executive serves as a director or a member of their board of directors of both companies, it may cause an interlocking directorate issue. Shareholders generally elect members of the board of directors, or other board members will appoint them.

Do interlocking directorates violate antitrust laws?

However, if those two corporations are competing with each other, interlocking directorates may violate antitrust laws. For example, if a firm purchases another company and a director or executive serves as a director or a member of their board of directors of both companies, it may cause an interlocking directorate issue.

Does interlocking directorates prevent collusion in corporate governance?

Interlocking directorates does not prevent a board director from serving on a client’s board. Although there are still many opportunities for collusion through interlocking directorates, recent trends in corporate governance have shifted more power to the CEO.

What is an interlock in business law?

In the United States, the Clayton Act prohibits interlocking directorates by U.S. companies competing in the same industry, if those corporations would violate antitrust laws if combined into a single corporation. However, at least 1 in 8 of the interlocks in the United States are between corporations that are supposedly competitors.

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