Hedge Fund Glossary

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Independent Director

directors who do not have a material relationship with the listed company — i.e., they are outsiders, and certainly not employees. Sarbanes-Oxley and the rules adopted by the stock exchanges have a complex set of requirements as to who qualifies as independent. In general, you know one when you see one. SEC rules require that the audit committee of a company be comprised entirely of Independent Directors. Stock Exchange rules require that the full board be comprised of a majority of Independent Directors. Note that a “Non-Interested” Director for purposes of the Investment Company Act is similar in concept but is not the same.

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