Escolar Documentos
Profissional Documentos
Cultura Documentos
What is a director
Shareholders own limited companies and Directors run them Limited companies minimum one, PLCs - two Roles & responsibilities
case law Companies Act 2006 act in a way which is most likely to promote the success of the business
Who is a director?
Director in law
Executive directors Non Executive Directors Nominee directors Alternate directors
Director by conduct
Shadow director
Appointment of directors
Shareholders appoint who they want Rules in Articles of Association
How many How long to serve What happens at end of term
Duties
Exercise a degree of skill and care Act in good faith - interests of company as a whole Obey the law Continuance
Liabilities
Retirement of directors
Rules in Articles of Association
May retire after set term Offer for re-election at AGM
Purpose of Board
Seek to ensure the companys prosperity by collectively directing the companys affairs whilst meeting the appropriate interests of its shareholders and relevant stakeholders
(IoD 2001 Standards for the Board)
Shareholders
Board of Directors
Management
Role of Board
Provide entrepreneurial leadership of the company within a framework of prudent and effective controls, which enable risk to be assessed and managed Set companys strategic aims, ensure that financial and human resources in place for the company to meet its objectives & review management performance. Set companys values and standards and ensure that its obligations to its shareholders and others are understood and met.
Board roles
Foresight Establish vision, mission & values Set strategies & structure Delegate to management & review Exercise accountability to shareholders and be responsible to relevant stakeholders
Farsight Oversight
Hindsight
Respective roles
Board
Collectively directs companys affairs
Chairman
Leads the board & manages its business
Board fundamentals
Board fundamentals
Companys mind and will Joint & several responsibility Council of equals Chairman is first amongst equals MD has no boardroom seniority NEDs - director role only; executive directors also managers.
Contribution of NED .
Key areas: Strategy Performance Risk People A Non-Executive Director should bring
Attributes of NED
Experience Intellect Commonsense Tenacity Courage Wisdom Diplomacy Vision Credibility, experience and stature Business, commercial and technical knowledge, skills and experience soft skills - communication, influencing, mentoring etc.
Why NED?
Why companies want NEDs Reasons for becoming a NED Time commitment for a NED Payment for NED
Effective Board
Entrepreneurial / prudent control. Know workings of company - answerable for actions Stand back - objective long term view Sensitive to short term issues / informed about long term Focus on commercial needs of business & responsibility towards employees, business partners, society etc At least one NED Performance objectives and review achievement Input to the company strategy and its development. Risk management. Balance of skills and knowledge
Effective Board
Good internal & external communications Regulatory legislation & market activity Respond constructively & quickly to problems & crises. Appropriate subjects on the board agenda. Effective board committees Feedback to management on requirements. Regular, well informed & constructive board meetings. Well led by effective Chairman Good, well managed shareholder relations Good relations within the board. Can raise issues and concerns
Role of Chairman
Lead the Board Accurate and timely information Communicate effectively to the shareholders Views of the major investors Maximise contribution of NEDs Set the agenda Ensure sufficient time for issues Referee Development needs of new Directors. Annual assessment of board's performance Good dialogue between Executives and NEDs Succession planning of board members Effective implementation of board decisions
Types of Board
Properly functioning Board Minimalist Board Disfunctional Board Subsidiary Board
Disfunctional Board
Dominance of shareholder / Chairman / MD Not acting as a council of equals Inadequate skills, knowledge & ability Lack of right blend of skills and experience Unable to differentiate - Board vs management Unable to differentiate - director vs shareholder Day to day rather than Board issues Unable to establish vision and formulating strategy
Disfunctional Board
Inadequate Chairman Form over substance Lack of communication, conflict or interpersonal issues Information withheld from Board / NEDs Focused on short-term rather than longer term strategic Board unable / unwilling to provide governance Board does not have confidence of shareholders NEDs not seen as providing any benefit
Board Committees
Remuneration committee Audit committee Nomination committee
Penalties
Responsible for management of company - act in a way to promote success of business & benefit shareholders. Responsibilities to employees, trading partners, & state. Wide powers to promote the company but serious penalties if abuse powers, or use irresponsibly. Legal duties include: Employment Health & safety Tax Company law
Penalties
Personal liability
Joint & several liability Unlimited liability
CV
What do you have to offer?
Other points
Letter of NED appointment Reading list
We welcome your feedback on this guide.If you would like to send us your comments or require any further informationplease email us on:info@innovation-nations.com
Alternatively please visit our web-site at:www.innovation-nations.com When you no longer need this booklet, Please recycle it. The Good Practice Notes - The role of a Non-Executive Director in an SME has been reproduced for Innovation-Nations with the kind permission of: