Interlocking directorate term refers to networks of people who serve as directors of several corporations at the same time.
What is the Interlocking directorate?
- The term "interlocking directorate" describes the practice of company board members serving on the boards of several other corporations.
- A multiple directors is a person who serves on many boards.
- Two companies are said to be directly interlocked if one of their directors or executives also serves as a director of the other company, and indirectly interlocked if both of its directors sit on the board of a third company.
- Despite being common and legal, this practice casts doubt on the accuracy and impartiality of board judgments.
What does it indicate when something is interlocked?
- Given the amount of members who serve on both boards and the possibility that neither corporation would operate independently of the other, there is a link between the boards of directors of different corporations.
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