Produced by Julie Garland-McLellan, Consultant at AltoPartners Australia and non-executive director and board consultant based in Sydney, Australia.

Contribution by Lauren E. Smith. Lauren is Managing Partner and Co-Head, Board Practice, DSG Global / AltoPartners USA. She has been named three times to the National Association of Corporate Directors (NACD) Director 100 as a top governance professional in the country. She is the current Chair Governance and past President of the NACD Florida Chapter. She is an NACD Board Leadership Fellow and an NACD Certified Director. Lauren is a Board Member of the Greater Miami Chamber of Commerce and sits on the Advisory Board of Women Executive Leadership. She is based in Miami, Florida, USA

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The Director’s Dilemma - February 2026

This month our real-life board dilemma concerns a board that allowed executives to usurp the role of the board and is now suffering the consequences.

Fenella sits on the board of a listed company that is still chaired by the founder and run with strong emphasis on delivering what the founder needs. She has always taken heart that, although the board is sometimes left out of the loop on decisions that exceed management delegations, everyone acts in the good commercial interests of the company and there is no ‘real’ conflict of interest.

A few months ago, the CFO (who has been with the company since it started) was struggling with the demands of the combined CFO/Co Sec role and the board discussed that they should consider appointing a Company Secretary with listed company expertise. There was no mention of the discussion in the minutes, and Fenella didn’t ask for it to be inserted because there had been no decision. At the next board meeting, the CFO introduced the board to a new Company Secretary whom he had recruited. The new Company Secretary was asked to minute the board’s in camera conversation so Fenella didn’t feel comfortable raising her concern that the board had not been involved in the recruitment or that the new secretary had no formal qualifications or experience with listed boards.

The CFO has continued to struggle; he is not coping with the accurate timely disclosures needed to comply with the exchange rules. Fenella suspects her fellow independent director - who chairs the audit committee - shares her concerns. She would like the board to discuss performance management and training, demotion or replacement. She is hesitant to approach the chair directly and alone but also hesitates to raise the issue in the board or in camera as the new Company Secretary is always present and clearly feels that the CFO is her boss and deserves her loyalty.

What should Fenella do?

Lauren’s Answer

Fenella’s instincts are sound, and the situation now requires deliberate, well-documented action rather than further restraint. Three priorities should guide her next steps: allies, process, and record.

First, she should align privately with the independent director who chairs the audit committee. A one-on-one conversation framed around regulatory risk, disclosure obligations, and board accountability (not personalities) is appropriate and prudent.

By seeking alignment, the issue becomes an audit-committee-level governance matter. Second, she should use a formal board process to create a protected forum. She can request that the chair convene an in-camera session of independent directors only, explicitly excluding management and the Company Secretary. This is standard practice on listed boards and avoids the loyalty conflict currently chilling discussion.

If the chair resists, that resistance itself is a governance signal that should be noted. Third, Fenella should insist on proper documentation going forward. She can ask that concerns about CFO performance, disclosure compliance, and the Company Secretary’s qualifications be reflected in minutes or in a confidential board or audit committee memo. Silence in the record is exposure for directors.

Fenella should advocate for a structured response for the CFO performance issues: an external assessment of finance and disclosure capability, targeted training with deadlines, and a clear escalation path if performance does not improve. On the Company Secretary, the board should clarify reporting lines (to the board, not the CFO) and reassess whether the role requires replacement or supplementation.

If these steps are blocked, Fenella should consider independent legal advice—not as an escalation tactic, but as protection of her own fiduciary position.

Julie’s Answer

Fenella is right to be concerned. The CFO should not be making the appointment of a company secretary without input from the board. Neither, for that matter, should the Chair. Fenella is dangerously distant from the mechanisms of control and direction; she needs to get back into the processes for delegation and decision-making ASAP.

She could start with a conversation with the other independent director. Hopefully he will understand the risks of management making decisions that should be reserved for the board and support her in addressing the issues.

The Audit Committee Chair could review delegations to ensure that these are contemporary and appropriate. This should include delegations for hiring, representing the company, and/or entering into contracts, not just financial levels of signing authority. Fenella needs to discuss this with him and ascertain if he is willing to start this process. If he is not, then she can suggest it herself at a board meeting.

Next, Fenella should have a candid discussion with the Board Chair and suggest that, as a minimum, the Company Secretary receive training on company secretarial duties. A company secretary is a key element of the board’s governance; directors need to rely on her judgement. If the chair is amenable, Fenella could next suggest that a skilled professional company secretary be brought in - by the board - on a part-time basis to establish processes and help train the new Company Secretary. She should also raise the issue of ‘board only’ time excluding non-directors.

If Fenella’s colleagues are willing to enhance their governance, she should stay and help. If they are not, she should seriously consider the risks of being on a listed board that has no control over its governance processes and financial disclosures.