Company Law UK NonExecutive Directors and the Combined Code 2008

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According to the Companies Act 1985 and also the new Companies Act 2006, there has been no definition of NED as such, and a lot about duties and responsibilities of NED would vest with the roles they perform. It also needs to be seen that one of the main aspects would be in terms of detached, unbiased and independent view which a NED may take in corporate affairs of the company in which he is serving as NED. It should also be seen that the main roles of NED would be in terms of acting as an ethical check on the executive directors, especially with regard to power consolidation and influence exercised over the organization.

In their roles as executive whole-time directors, wielding major powers and exerting high influence over the destiny of the Companies they administer, it may be quite likely that WTD may misuse their powers or exercise it in an autocratic and domineering way, which may, in certain cases, prove prejudicial to the larger interests of the Company and its shareholders. “Non-executive directors usually stand back from the day-to-day running of the business, drawing alongside the executive team as required to facilitate the strategic decision-making process. Exactly what this entails will vary from company to company, depending on what is required at each stage of a company’s development.”

Thus, it could be inferred that under UK laws, the role and functions of non-executive directors are determined by their performance in the organization and the undertaking of specific tasks as laid down by the shareholders of the companies during General Meetings. The one aspect that emerges very clearly is that NED, in their outside capacity could serve as robust watchtowers for the protection of inside interests. They could serve to monitor the activities of the executive board and even be empowered to discipline or remove errant executive directors.

Under the Combined Code of Governance 2008, it is seen that NED scrutinizes the performance of management in overseeing that it meets the agreed goals and objectives of the Company.&nbsp.&nbsp.