NON EXECUTIVE DIRECTOR (NED) – THE LEGAL RESPONSIBILITIES
As a Non Executive Director (NED) in the United Kingdom, there are several legal responsibilities that you need to be aware of in order to fulfil your role effectively and to avoid any potential liabilities.
Here are some key legal responsibilities of a UK NED:
1. Compliance with company law:
As a NED, you have a legal obligation to comply with company law and to act in the best interests of the company. This includes following the company’s articles of association and complying with any relevant legislation, such as the Companies Act 2006.
2. Fiduciary duties:
As a NED, you have a fiduciary duty to act in the best interests of the company and to exercise your powers for the benefit of the company and its shareholders. This includes the duty to exercise independent judgment and to act with care, skill, and diligence.
3. Duty of care:
As a NED, you have a duty of care to act in the best interests of the company and to take reasonable steps to ensure that the company is properly managed. This includes the duty to be informed about the company’s affairs and to take an active interest in its operations.
4. Conflict of interest:
As a NED, you have a legal obligation to declare any potential conflicts of interest and to avoid any actions that may harm the company. This includes avoiding any dealings with the company that may give rise to a conflict of interest, such as competing business activities.
5. Insider trading:
As a NED, you have a legal obligation to comply with insider trading laws and to avoid any actions that may constitute insider trading. This includes not using any confidential information obtained through your position as a NED for personal gain or to the disadvantage of the company.
6. Health and safety:
As a NED, you have a legal obligation to ensure that the company complies with health and safety laws and to take reasonable steps to ensure the health and safety of employees and other stakeholders.
7. Data protection:
As a NED, you have a legal obligation to comply with data protection laws and to ensure that the company protects the privacy and personal data of employees and other stakeholders.
In conclusion, as a UK NED, you have several legal responsibilities that you need to be aware of in order to fulfil your role effectively and to avoid any potential liabilities. These responsibilities include compliance with company law, fiduciary duties, duty of care, conflict of interest, insider trading, health and safety, and data protection. By fulfilling these responsibilities, you can help to ensure the success and stability of the company and to protect your own position as a NED.
A couple of useful links on the role and legal responsibilities of a Non-Executive Director:
https://www.thecorporategovernanceinstitute.com/
https://www.cipd.co.uk/knowledge/strategy/governance/non-executive-directors-factsheet#gref