Appoint a Non-Exec Director - letter template

A Letter of Appointment for a Non-Executive Director (NED) formally appoints someone as a Non-Executive Director of your company. The letter of appointment sets out the role and responsibilities of your new Non-Executive Director.

It’s a straightforward document that covers areas such as the Non-Executive Director’s duties, their compensation, their confidentiality obligations and how the relationship can be terminated.

Important to know: a Non-Executive Director Letter of Appointment isn’t an employment contract, it’s a contract for services. A Non-Executive Director isn’t an employee of your company.

If you’re appointing an Executive Director, you should use an Employment Agreement instead.

Non-Executive Directors (NEDs) make important contributions to businesses of all sizes. Typically, they sit on the Board and have responsibility on the Board’s sub-committees.

The role of a Non-Executive Director can involve influencing the direction a company takes, helping to build and maintain valuable contacts, and advising on key appointments.

NEDs aren’t involved in the day-to-day running of the business, but they bring an independent perspective that helps to guide the Executive Directors on strategy and in making strategic decisions.

Broadly, the role of a Non-Executive Director is to:

• help and advise on business strategy
• review management performance
• scrutinise the company‘s risk and risk management
• support and mentor the CEO and senior management team
• hold the management team to account
• set the level of remuneration for Executive Directors
• offer specialist advice
• appoint and remove Executive Directors

A Non-Executive Director is expected to have broad industry experience as well as specialist knowledge. Someone can be a Non-Executive Director for more than one company, so while it’s understood they will divide their time between them, they will be expected to show significant commitment to each company, and have enough time to properly fulfil their responsibilities to the Board.

In law, there’s no distinction between an Executive Director and a Non-Executive Director in terms of their legal responsibilities and fiduciary duties (their duty to act on behalf of and in the best interest of the company). They have the same fiduciary duties and the same potential liabilities – and they’re both subject to the statutory duties of directors set out in the Companies Act 2006 and common law duties.

Read more on the UK Government website:
Gov.uk: Duties of a director

You’ll need to use a Letter of Appointment when you’re appointing a Non-Executive Director to your UK-based company.

Appointing an Executive Director? Then you’ll need to use our Employment Agreement instead.

The letter sets out the Non-Executive Director’s role and responsibilities. The compensation they receive is usually dependent on their time commitment and how complex or detailed their role within the business is.

The letter should include:

• their role and duties
• how much time they’re expected to commit
• compensation, fees and expenses
• how the relationship can be terminated
• any specific board duties they’re expected to oversee
• how confidential information will be protected
• any restrictions and the management of conflicts of interest
• Directors and Officers insurance and/or indemnity cover

When you appoint or terminate a Director, you need to notify Companies House, whether they’re an Executive Director or Non-Executive Director.

On SeedLegals, you can create a Letter of Appointment and have all parties sign online. Then go to the Board section to auto-generate the AP01 form to send to Companies House to notify them of the appointment. You’ll need to add a few key details such as the NED’s date of birth and then the rest of the form is filled in for you, based on the terms of the Letter of Appointment. It’s quick and easy, with on-screen help to guide you through the steps. If you need any extra help, just message our friendly team.

A Letter of Appointment sets out clearly what the rights and responsibilities are, for both the Non-Executive Director and the company.

You need to make sure that your directors act in the best interests of your company at all times – and the Letter formally details the terms of the appointment.

The Letter of Appointment could help to prevent or resolve disputes in the future because it sets out what’s expected of the Non-Executive Director and the company.

The easiest way to create a Non-Executive Director Letter of Appointment is to start with a template and customise it so that it’s exactly what you need.

You can start with a SeedLegals Letter of Appointment template and choose the terms you need. To get started, log in to SeedLegals, go to Agreements and select Letter of Appointment (NED). Add your NED’s details and then answer the straightforward questions to create your document.

When your Letter of Appointment is ready, you can send it to your Non-Executive Director to review and all parties will sign online. It’s fast and incredibly simple. If you need any help, chat online with our experts.

Then you’ll need to notify Companies House. On SeedLegals, go to Board and click Director Appointment. Fill in a few extra details (such as the NED’s date of birth and any former names) and we’ll pre-fill the AP01 form for you to send to Companies House.

We think it’s the fastest and easiest way possible to appoint your NED and notify Companies House - there’s on-screen to guide you through.

Best of all, we store your documents securely for as long as you need, so you can access them in My Documents anytime. And if you need to create a new Letter of Appointment for a Non-Executive Director in future, you can replicate the terms you’ve used before – you don’t have to start from scratch.

Yes, SeedLegals Letters of Appointment for Non-Executive Directors are set up to protect the personal data of your directors.

In fact, when you create contracts with SeedLegals, they’re signed and stored online, so they’re more secure than sending documents by post and storing them as paper files.

The contracts and agreements you can create with SeedLegals are drafted and regularly reviewed by our legal experts and trusted by thousands of businesses.

For an Executive Director, instead of the Letter of Appointment, you’ll use our Employment Agreement.

When the contract is signed, go to Board on SeedLegals to download the AP01 form to send to Companies House. We pre-fill the forms with information from the Director’s Employment Agreement.