Director & Officer questionnaires are an essential tool for public corporations — or corporations that are about to go public — which need to comply with stock exchange regulations and initial listing standards. They are lengthy documents which must be sent to and filled by dozens of executive officers and board directors. But how do you avoid a long, troublesome process when you need to get the questionnaire distributed to dozens of board members and get them back properly filled, in time for an IPO’s registration statements, or for periodic reports? And how to ensure your questionnaire is not missing vital information? That’s all part of the board evaluation process. In this article, we look more in detail at the purpose and form of D&O questionnaires, and give you a few tips on how to create better questionnaires and make it easy for each director and executive officer to fill them correctly and in time.
A D&O questionnaire is a form with a series of questions addressed individually to each director and officer in a corporation board. Its purpose is to collect information about anything that might bring into question that person’s qualifications and independence as a decisionmaker in the corporation. The company discloses the information obtained from board administrators through D&O questionnaires to stakeholders and regulatory bodies such as the Securities and Exchange Commission (SEC).
Director independence questionnaire typically includes questions about the respondent’s educational and professional background, family connections within the company or its affiliates, past positions held by the respondent, past or current litigations they are party to, conflicts of interest, and financial disclosures. Sometimes board effectiveness checklist incorporates some of such information.
More specifically, the directors and officers questionnaire asks detailed questions about:
If you want to know what an actual D&O questionnaire sample looks like, you can download our template.
Increase productivity with our sample
D&O stands for “directors and officers”, that you know — but who exactly are they? It’s easy. The board composition says the officers of the board are the corporate secretary, the board chair, and the executives. The board directors are all the other board members.
Apart from officers and directors, the company’s legal counsel can also be involved in the process of creating the D&O questionnaire, since they give advice on all legal requirements the company must fulfill.
Once the questionnaires are filled, they are submitted to the officials at the financial industry regulatory authority.
If you want to improve your Directors & Officers questionnaire, to make sure they are comprehensive, clear, and clutter-free, here are a few tips:
1. Make sure that the questions are clear and concise. Granted, sometimes you just have to use jargon — but more often than you think, you can write in everyday language, which is a lot clearer and easier to understand. And don’t let appearances fool you – being brief and being concise are not necessarily the same. Normal language often takes more words than legalese to say the same thing, but as long as you don’t add unnecessary ideas, you are just as concise.
2. Tailor your questionnaire to your company and industry. Don’t just take one of the templates we listed above and use it as it is. It’s important to adapt it, so that every question is pertinent to your board members, and no pertinent questions are left out.
3. Keep your questionnaire for D&O up-to-date. Things change from one year to the next, so just because your questionnaire was perfectly tailored to your company last year doesn’t mean it’s still perfect this year. Before you send it out, go over it and delete, add, and adapt questions according to changes in regulations and in the company itself.
Financial institutions, such as banks and credit unions, use D&O questionnaires in order to collect data that will help them comply with industry regulations and with federal and state laws and regulations.
If you are preparing your D&O questionnaire and want to know if there are any new D&O questionnaire requirements for this year, here are two pieces of advice from the White & Case law firm:
Consider adding questions to your D&O questionnaire that explore involvement in setting and monitoring ESG goals and strategies, understanding of the company’s environmental footprint, and social impact.
Questionnaires for D&O are unavoidable – and so are the challenges they bring along. The most common difficulties you have to face when using a D&O questionnaire are:
While companies can work with paper D&O questionnaires, a digital solution is much more effective than the physical one in addressing the issues listed above.
Board management software saves time and trouble to all the people involved in the D&O questionnaire process — with a board portal, it’s easier and faster for them to create or update questionnaires, share them with board members, fill them with all required information, and submit the questionnaires to the competent regulatory bodies.
A board portal also enhances data security and makes it easy to store the questionnaires after the process is completed. And in case the board decides to call a remote board meeting to discuss the questionnaire for D&O, a board portal makes it possible to conduct a secure, effective and paperless board meeting without leaving the platform.
If you would like to try using a board portal for your D&O questionnaire process, iDeals Board offers an excellent online board management solution. It is a top choice of our experts across the years!