Company directors can sit on boards for decades. Are term limits the answer?

The role of non-executive directors is crucial as companies grow, but long tenures can reduce independence and lead to complacency. While some argue for term limits, such as the Australian Prudential Regulation Authority’s proposal for a 10-year cap in certain sectors, others highlight the value of experience gained over time. Research shows directors with tenures of 9-17 years can still contribute effectively, but those with over 25 years may become less effective. Instead of term limits, regularly assessing all directors’ performance may be a better approach to ensure effectiveness.

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