Question

Consider an individual who serves on the board of a bank and also sits on the board of a computer manufacturing company that borrows money from that bank. This individual is most likely part of a(n) __________.

Answer 1

Interlocking corporate director

Step-by-step explanation:

Interlocking corporate director refers to an individual serving as a director on the board of multiple companies.

Interlocking directorship is not considered illegal if the companies of which the same individual serves as a director, are not competing firms.

In the given case, an individual serves on the board of a bank, also serves the board of a computer manufacturing company that usually borrows from the bank.

Here, the independence and objectivity of the director would be impaired and this may lead to a situation of conflict of interests as the director exercises sizable influence in framing the lending policies of the bank.

Thus, such a situation would be in violation and the director may have to step down from the board of one of the companies.