Board and non-executive roles
What is a non-executive director?
A non-executive director is a member of a company's board who holds no executive management role. They are a registered director under UK law, appointed to the board and filed at Companies House, and they owe the company the same general duties as any executive director. Their job is independent judgement, scrutiny and accountability rather than running the business day to day.
What the role involves
A non-executive director attends board meetings, tests the plans and numbers the executive team brings, and holds that team to account for delivery. They contribute to strategy, satisfy themselves that risk and controls are being managed, and take part in decisions on succession and executive pay where the board has committees for those things.
The distinguishing feature is distance. A non-executive is not an employee, does not manage staff and does not own an operational function, which is precisely what allows them to ask questions the executive team is too close to ask.
Is a non-executive director a real director in law?
Yes. Section 170(1) of the Companies Act 2006 states that the general duties in sections 171 to 177 are owed by a director to the company, and the Act draws no distinction between executive and non-executive directors. The duty to exercise reasonable care, skill and diligence under section 174 applies in full, and section 174 is judged partly against the knowledge and experience the individual director actually has.
That has a practical consequence founders sometimes miss: a non-executive appointment carries liability. It is a statutory office, not an honorary title.
How independence is judged
For listed companies, Provision 10 of the UK Corporate Governance Code 2024 lists the circumstances likely to impair a non-executive director's independence, including recent employment by the company, a material business relationship in the last three years, additional remuneration beyond a director's fee, close family ties with directors or advisers, representing a significant shareholder, and more than nine years' service from first appointment.
The Code applies to companies in the commercial companies and closed-ended investment funds categories of the UK Listing Rules, not to private companies. Private boards still use those tests as a reference point, because investors and acquirers do.
Sources and review
- Companies Act 2006, Part 10, Chapter 2, sections 170 to 177 (general duties of directors).
- Financial Reporting Council, UK Corporate Governance Code 2024, published 22 January 2024. Provisions 9 to 11, board independence.
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