It would be easy to caricature the row over Sir Stuart Rose's £100,000 investment in Martha Lane Fox's karaoke bars as an absurd fuss over nothing. With Britain's biggest clothing retailer heading into a nasty downturn, this is surely no time to nitpick about the minutiae of personal financial dealings between two of its board members. This is a time to be wholly focused on shifting pants, not ticking boxes.

But that is to misunderstand the very serious investor reservations about the planned reshuffle at the top of M&S and the awarding of the additional role of chairman to an already well-ensconced chief executive. Shareholders are extremely concerned that too much power is in the hands of one man, a man whose recipe for turning round the retailer is far from proven. Their worry is that there might not be enough tough eggs sitting round the M&S boardroom table to curb Sir Stuart if he starts exhibiting megalomaniacal tendencies; if necessary to sit on him hard.

Normally, the “independence” shareholders are looking for in non-executive directors is an absence of any commercial relations with the company beyond a straightforward fee. In the case of M&S, it is the absence of any commercial relations with the chairman. Given that context, it is perfectly reasonable for shareholders to look askance at that karaoke investment and wonder whether Ms Lane Fox has been compromised.

For she is not made of marble and must feel gratitude, if not a sense of obligation, to Sir Stuart. Raising start-up finance is never easy, especially for a business as vulnerable to fashion as a string of karaoke bars. Having the kudos of one of Britain's best-known retailers as a backer is not to be sniffed at either.

And then there is the ongoing relationship. What if the new business, Lucky Voice, were to falter and need a fresh injection of capital? Ms Lane Fox would be in the awkward position of having to go to Sir Stuart as supplicant.

None of this is to say Ms Lane Fox could not have exercised her duties properly. The business world is choc-a-bloc with such conflicts of interest. It is how they are managed that matters. Ms Lane Fox, after years on the dot-com rollercoaster, is robust enough to put those to one side when judging M&S matters. But the relationship just looks bad.

Sir Stuart has huffed a bit but has finally done the sensible thing and agreed to sell his stake. If he is right about the duration of the downturn in Britain - he is pencilling in spring 2010 for the upturn - baling out of a consumer-dependent business like karaoke bars could save him a bundle financially as well as reputationally.

patrick.hosking@thetimes.co.uk

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