Questions

Executive And Non Executive Directors

Company law defines a “Director” as “any person occupying the position of director, by whatever name called”. As such there is no ‘legal’ distinction between an executive director and non-executive director.

The differences are more usually found in the roles they perform. Non-executive directors are generally less involved in the day-to-day running of the company and are usually appointed for their expertise and to contribute towards the strategic decision-making processes where required. Executive directors on the other hand are usually responsible for the day to day running of the company and typically have a hands-on role whilst working full time in the business.

As a whole, the board, which includes the non-executive directors, are collectively responsible for the success or failure of the company.

LIABILITIES

There is no distinction in company law between the liabilities of an executive director and a non-executive director.

As such non-executive directors are exposed to similar risks as those of executive directors, namely:

disqualification from taking up certain roles for the period of suspension;

risk of personal liability for: breach of fiduciary duty; breach of duty to exercise reasonable skill, care and diligence; wrongful trading; countless other statutes and statutory instruments under which non-executive directors can be personally liable;

corporate manslaughter;

WORKING WITH YOU

Non-executive directors can be more vulnerable than executive directors because they do not have constant, and sometimes regular, involvement in the business.

Hatten Wyatt has experience in sitting on boards in non-executive roles. Our company commercial department are also able to advise companies and individuals who are thinking of offering or accepting a non-executive position on their duties and liabilities.

Contact us directly to find out more

Keyperson

Jasvinder Singh Gill

Solicitor

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