Interlocking Directorate

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Interlocking Directorate

The relationship that exists between the board of directors of one corporation with that of another due to the fact that a number of members sit on both boards and, therefore, there is a substantial likelihood that neither corporation acts independently of the other.

Because the same persons occupy seats on the boards of companies that are supposed to compete in the marketplace, there is a potential for violations of federal antitrust acts, particularly the Clayton Act (15 U.S.C.A. §§ 12-27 [1914]) which prohibits the existence of inter-locking directorates that substantially reduce commercial competition.

References in periodicals archive ?
Note: An interlocking directorship would occur if a Company A executive served on the board of Company B and an executive of Company B served on the board of Company A.
The corporate power elite in South Africa: interlocking directorships among large enterprises.
Deeper knowledge about Congress and the interlocking directorships of the NGOs would also be extremely helpful in further analysis.
Interlocking directorships (directorates) are more common in groups of outside directors, as they include a number of public and political figures who are recruited from other companies, and especially from the banking, insurance, and investment sectors (Scott, 1991).
last year amid concerns of potential conflicts from interlocking directorships.
But then Silicon Valley's idea of corporate boards has long consisted of cosy, interlocking directorships which would be considered collusion in most other industries.
Lester and Cannella (2006) propose interlocking directorships as one means by which successful family firms might solve intra-family agency problems efficiently.
Additional criteria for qualifying as an independent director, including restrictions on interlocking directorships, further limit the availability of CEOs and others in the business community for board appointments.
Reingold takes a swipe at interlocking directorships, particularly in the case of AT&T and Citigroup, the indefeasible rights of use (IRUs) and their accounting treatment.
By means of interlocking directorships, cross-shareholdings and other devices, groups of apparently different companies have formed, in fact, one enormous capitalist monopoly.
Chapter Three continues the economic analysis of elite unity by focusing on interlocking directorships in the Canadian economy.
In a study of what constitutes effective ownership of corporations, a historic House Committee report highlighted two critical factors: (1) institutional stock and bond holdings and (2) interlocking directorships (House Committee on Banking and Currency, 1968).