Professor/barrister Mark Watson-Gandy of City University was interviewed in Business Money about the role of a NED in the UK and some important practical considerations. Below are some quick take-aways on the basic considerations of a NED and minimum levels of care:
- Interestingly in English law, the NED term has no set meaning with no distinction with execs,
- However, NEDs have specific duties under the UK Companies Act 2006 include:
- Exercise independent judgement and reasonable care and skill,
- Avoid conflicts of interest and note accept benefits from 3rd parties,
- To declare an interest in proposed transaction or an arrangement.
- NEDs should consider relationships with stakeholders, including employees, the community, etc
- NEDs are not required to over-rule specialists such as FDs, etc in their fields,
- They are expected to display a level of knowledge, skill and experience to certain standards,
- An NED can defer to the majority view, especially in areas where their expertise was greater,
- The duty of diligence is at a certain level, but not onerous, but
- Directors can be disqualified if they fail to take steps whatsoever to prevent mis-leading statements.
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