Director Tenure And Independence Under King V: A Hard Limit Or A Factor For Consideration?

The release of the King V Code on Corporate Governance has prompted boards across all sectors to take a fresh look at their governance policies and practices. One area that has attracted particular attention is the treatment of director tenure as a factor when assessing whether non-executive directors can be categorised as independent. Specifically, a question many boards are grappling with is whether the Code's reference to a nine-year period of service on the governing body operates as a de facto hard limit on independence or whether it is simply one of several indicators to be weighed in a holistic assessment.

The nine-year tenure factor

Under Recommended Practice 42, King V sets out a list of factors that may indicate that a member cannot be categorised as independent. One of these factors is that a member has served as a member of the governing body for more than nine years. However, this is framed as one item in a non-exhaustive list of indicators and not as an automatic disqualifier.

Furthermore, Recommended Practice 43 states that:

“When determining whether a non-executive member can be categorised as independent or not, the governing body should evaluate all pertinent factors and circumstances holistically and within the substantive meaning of independence. Should the governing body conclude that a member is independent despite the presence of one or more factors that may indicate otherwise, it should provide a rationale for its conclusion.”

What this tells us is that a board may find a director to be independent even where one or more of the factors listed in Recommended Practice 42 are present, provided it explains its reasoning.

The broader conceptual framework

King V's broader conceptual framework supports this interpretation. The Code's application regime is “apply and explain”. As such, organisations should apply the principles universally but explain any failure to adopt and/or any modification of the recommended practices. The Code is explicit that the recommended practices are not intended to be applied mechanically as if they were rigid rules. Importantly, the King V Disclosure Framework is an inextricable part of giving effect to the Code and is a requirement for any organisation that wishes to claim application of King V. This includes providing a concluding statement on the governance outcomes, specifically on whether the application of the King V principles and the implementation of its recommended practices are considered to have realised value for the organisation.

Furthermore, the Code encourages mindful application, which presupposes a thorough understanding of how the implemented practices would support the objectives and achievement of the relevant governance outcome. Adapting and scaling practices to suit the organisational setting is therefore permissible and advisable provided that it is implemented in accordance with relevant proportionality considerations.

Practical implications for boards

For the reasons set out above, we do not consider that the nine-year tenure criterion operates as a de facto hard limit. A board may well conclude that a director who has served for longer than nine years remains independent. However, if it does so, there are two important obligations to keep in mind. First, the board must genuinely evaluate all pertinent factors and circumstances within the substantive meaning of independence and cannot simply disregard the tenure factor. Second, the board must provide a clear rationale for its conclusion that the director remains independent despite the presence of the tenure indicator. This rationale should be disclosed in accordance with the King V Disclosure Framework, which requires transparency on how boards have applied the Code’s principles and recommended practices.

The overarching test for independence is whether, from the perspective of a reasonable and informed third party, there is no interest, position, association or relationship that is likely to unduly influence or cause bias in the director’s decision-making in the best interests of the organisation. The nine-year tenure factor is simply one consideration that feeds into this broader assessment.

Conclusion

King V represents a deliberate move towards outcomes-based governance, where the quality of governance is judged primarily on its consequences rather than by mechanical compliance with a checklist of recommended practices. The treatment of director tenure is a good example. Boards should not treat the nine-year period as an inflexible cut-off that automatically extinguishes independence. To do so would be to apply the recommended practices as if they were rules, which is precisely the approach the Code cautions against. Instead, we encourage boards to engage substantively with the question of independence, apply their minds to the totality of the relevant factors, and ensure that their reasoning is properly documented and disclosed. A well-reasoned determination that a long-serving director remains independent is not only permissible under King V, but also an example of the mindful and proportionate application of governance practices that the Code seeks to promote.

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