Should Your Board Use an Ad Hoc Committee?
Vedder Price Counsel Nathaniel Segal was recently quoted in FT’s BoardIQ discussing ad hoc committees for boards. “For boards and fund complexes of all sizes, an ad hoc committee might be good for handling issues that are finite in time, one-time issues or for complex and technical issues where you may be able to leverage the experience of a particular director,” said Mr. Segal. He goes on to comment that there are some limits to what ad hoc committees can achieve and topics that may not be appropriate for an ad hoc committee. Read below to learn more about when an ad hoc committee may be appropriate for your board.
Top Considerations for Using Ad Hoc Committees
Boards contemplating the use of an ad hoc committee should consider the following:
1. Subject Matter: What is the subject matter and its expected duration? Ad hoc committees may be useful for technical or complex matters or discrete issues with finite durations. However, matters that are expected to monitored by fund directors on an ongoing basis would generally not be appropriate for an ad hoc committee.
2. Objective: What is the committee’s objective? Ad hoc committees should have a clear goal, objective or work product to avoid “governance drift” into matters appropriate for, or delegated by charter to, an established committee.
3. Leadership: Is there a director with particular expertise that is willing and able to lead the committee?
4. Reporting: How and when will the ad hoc committee report its work to the full board? How will the ad hoc committee ensure that all directors can make an informed business decision about any proposals related to the ad hoc committee’s work?
Vedder Thinking | Articles Should Your Board Use an Ad Hoc Committee?
Article
July 25, 2019
Vedder Price Counsel Nathaniel Segal was recently quoted in FT’s BoardIQ discussing ad hoc committees for boards. “For boards and fund complexes of all sizes, an ad hoc committee might be good for handling issues that are finite in time, one-time issues or for complex and technical issues where you may be able to leverage the experience of a particular director,” said Mr. Segal. He goes on to comment that there are some limits to what ad hoc committees can achieve and topics that may not be appropriate for an ad hoc committee. Read below to learn more about when an ad hoc committee may be appropriate for your board.
Top Considerations for Using Ad Hoc Committees
Boards contemplating the use of an ad hoc committee should consider the following:
1. Subject Matter: What is the subject matter and its expected duration? Ad hoc committees may be useful for technical or complex matters or discrete issues with finite durations. However, matters that are expected to monitored by fund directors on an ongoing basis would generally not be appropriate for an ad hoc committee.
2. Objective: What is the committee’s objective? Ad hoc committees should have a clear goal, objective or work product to avoid “governance drift” into matters appropriate for, or delegated by charter to, an established committee.
3. Leadership: Is there a director with particular expertise that is willing and able to lead the committee?
4. Reporting: How and when will the ad hoc committee report its work to the full board? How will the ad hoc committee ensure that all directors can make an informed business decision about any proposals related to the ad hoc committee’s work?
