The non-executive director role
This guide was written by Coffin Mew LLP and is for general information only. Last updated May 2014.
What is a non-executive director?
Over recent years the role and prevalence of non-executive directors (NEDs) in UK companies have increased significantly. The diversity of individuals being drawn into the governance regimes of companies spanning the corporate world is also increasing – ownership of a hand tailored chalk stripe suit is no longer a pre-requisite!
For the individual, non-executive directorships can offer lucrative recompense along with opportunities for broadening cross-sector exposure. However, the legal duties and responsibilities should not be underestimated, either by those considering such directorships or the companies seeking to appoint them.
There is no legal distinction between executive directors and non-executive directors (the definition under the Companies Act 2006 defines a director as including any person occupying the position of director, by whatever name called); the distinction lies in the role that they perform. Non-executive directors usually stand back from the day-to-day running of the business, drawing alongside the executive team as required to facilitate the strategic decision-making process. Exactly what this entails will vary from company to company, depending on what is required at each stage of a company’s development.
In a new business, a non-executive director might act as an entrepreneurial mentor, whose regular presence in the office provides inspirational leadership and an experienced voice guiding the company round the common pitfalls that result in many companies failing to fulfill their potential. At the other end of the spectrum, a non-executive director of a listed PLC may just attend board meetings a few times a year.
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- What is a non-executive director?
- What are the responsibilities and duties of a non-executive director?
- What liabilities are non-executive directors likely to face?
- What skills do NEDs need?
- Non-executive directors and the structure of the board
- What do CIPD members have to offer?