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