The role and types of company director |
|
| |
|
| Introduction |
|
| This article explains the types of director and why a company might prefer one type to another. |
|
| |
|
| It is important to note that the employment contract or ‘director’s service agreement’ should match the type of director. Net Lawman has a number of director’s documents available for download. These are linked on the right. |
|
| |
|
| Company management |
|
| All companies must have officers. A private limited company must have at least one director and a company secretary and a public limited company must have at least two directors and a company secretary. The director, or directors, must manage the company's affairs in accordance with its articles of association and the law. Certain responsibilities apply to all directors, whether executive or non-executive, and to all types of company whether trading or not. The company secretary is the chief administrator of the company. Read more about company secretaries. |
|
| |
|
| There are two broad types of company director: |
|
- Executive director, and;
- Non-executive director.
|
|
| |
|
| There is a distinct difference between them. |
|
| |
|
| Executive Directors (Chief Executive Officers) |
|
| The chief executive officer has the overall, primary management and leadership role in the organisation. Therefore, the CEO must have extensive knowledge and skills in a wide variety of areas. |
|
| |
|
| There is no standard list of the major responsibilities carried out by a chief executive officer, however the list below outlines the most common. |
|
| |
|
| Board Administration and Support |
|
| Supports board members by advising and informing, going between board members and staff, and supporting the board's evaluation of chief executive. |
|
| |
|
| Program, Product and Service Delivery |
|
| Oversees design, marketing, promotion, delivery and quality of programs, products and services. |
|
| |
|
| Financial, Tax, Risk and Facilities Management |
|
| Recommends an annual budget for Board approval and then manages resources within the budget. |
|
| |
|
| Human Resource Management |
|
| Oversees the management of the human resources team ensuring that they comply with current laws and regulations. |
|
| |
|
| Community and Public Relations |
|
| Ensures that the venture is seen in a positive light from outsiders. |
|
| |
|
| Fundraising (nonprofits-specific) |
|
| Oversees fundraising planning and implementation. |
|
| |
|
| What is a Non-Executive Director? |
|
| A non-executive’s role is less hands-on. A non-executive director may have less experience and less knowledge than an executive. However, the benefit here is that a non-executive can bring objectivity and an external awareness to the board. |
|
| |
|
| Non-executive directors are not usually involved with day-to-day management, however, the smaller the company, the more likely it is that there will be some hands-on work. |
|
| |
|
| The non-executive’s role is an over-viewer and whistle blower, ensuring adherence to good practice, respect for the interests of other stakeholders and adherence to the process of boardroom discipline. Non-executives are often thought of as “advisers” although this is not the case. The role is larger than this – the non-exec is a director and shares the legal duties and responsibilities of the executive directors. |
|
| |
|
| As far as corporate governance is concerned, non-executives are usually associated with Independence and may be self employed. |
|
| |
|
| What is meant by an Independent Non-Executive Director? |
|
| The following characteristics are indicative of a state of independence |
|
- The individual is not an employee of the company but perhaps self employed;
- The individual is not a professional advisor;
- Individual is not a supplier or customer of the company;
- The individual does not have a family connection with someone in the business;
- The individual’s directorship is for a fixed term and accordingly he is less likely to be motivated by self-preservation when taking decisions;
- The individual does not depend so heavily on his remuneration from the company as to make resignation difficult.
|
|
| |
|
| Click to Buy : Memorandum of Association |
|
