On your NED be it: a reminder of the expectations of the role of non-executive directors

On 18 January, the Institute of Chartered Secretaries and Administrators (ICSA) published a guidance note on the liability of non-executive directors (NEDs). Borne from its own and other industry guidance and from experience of company secretaries of UK listed companies, it is a useful reminder of the proper function of NEDs and the importance of minimising personal liability.

Executive and non-executive directors have the same legal duties, despite a distinction in their respective levels of time commitment and depth of knowledge about the business concerned. However, one of the many legacies of the recent financial crises has been an increased focus on corporate governance in the UK and the spotlight has fallen on, amongst many other things, the role of NEDs.

There is an undoubted shift in expectations of the role and ICSA’s guidance identifies steps which NEDs can take to reduce their exposure to liability. The recommendations outline approaches to work which may enable NEDs to demonstrate to a regulator or court that they have acted with care, skill and diligence in the execution of their roles and responsibilities…

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