An individual who serves on a company’s board of directors but does not occupy an executive position is known as a non-executive director. Non-executive directors serve as impartial consultants and are not in charge of the company’s day-to-day operations. According to the Companies Act of 2013, the phrase “Non Executive Directors” has no clear definition. However, Rule 2(k) of the Companies (Specification of Definition Details) Rules, 2014 defines what an Executive Director is. An executive director is a “whole-time director” who oversees the duties necessary for the operation of the business. This would be in accordance with Companies Act of 2013 Section 2(94). Under the Companies Act of 2013, the phrase “executive director” would be included in the definition of “whole-time director.” Therefore, a non executive director would be anyone who serves as a director but does not fully fulfill their duties for a corporation. The selection of non-executive directors is primarily based on the principle related to independence of functions.

Duties of a Non-Executive Director

Non-executive directors spend a portion of their time monitoring the business, attending board meetings, or managing the management team. By offering a comprehensive view of the company’s problems and defending the interests of shareholders, they bring value. These are their responsibilities:

1. A review of performance: Non-executive directors must assess how well the management team has performed in terms of achieving goals and objectives. Additionally, they keep an eye on the board’s executive members, have the power to fire senior management, and organize the appointments that will come after.
2. Strategic focus: The proposals developed by the executive team must be examined objectively by non-executive directors. They offer constructive feedback and a more comprehensive understanding of the external issues affecting the business, which aid in developing and directing the corporate strategy. They challenge the current ideas and offer an outside viewpoint, which helps to enhance business tactics. Along with the executive partners, non-executive directors establish the company’s principles and standards.
3. Commitment to time: A non-executive director is required to invest a significant amount of time in managing the organization. As a result, the director should inform the board of any additional significant time commitments when they are hired. If their timetable undergoes any significant modifications, they must contact the board immediately.
4. Risk administration: The task of creating frameworks and controls for gaining access to and managing risks is shared by non-executive directors and executive partners. The stakeholders should be reassured of the accuracy of the financial data and the strength and security of the risk management and financial controls systems.
5. People: Non-executive directors have the potential to network outside of the organization and increase its value. The company’s ties on the outside can aid it in fulfilling its goals and mission.

Before taking on any new obligations that might impact the chairman’s job, they should get the chairman’s approval. It is necessary for a non-executive director to take time out of his or her schedule in order to fulfill the obligations stated in the appointment letter.

6. Professional growth: Non-executive directors may receive advice on specific matters and bring them up in board meetings. The corporation may provide them permission to pay for any independent training they need in order to perform their duties.

Benefits of Services for Non-Executive Directors

Services for non-executive directors have various advantages:  

• Employment Contract: When it comes to writing the terms and conditions for the employment contract, we’ve got you covered. Non-Executive Directors must have employment agreements that meet the company’s requirements. Utilizing our non-executive director services would save you time and money.
• Correct Checks: We will make sure to do background checks for crimes and other types of offenses that may result in disqualifications or bankruptcy. This is a crucial stage in the selection of non-executive directors.
• Independence: The business can rely on independence when using nonexecutive director services. A corporation needs to appoint non-executive directors, which calls for a certain level of ability and caution that can only be offered by specialists. Utilizing our services for Non Executive Directors would therefore be advantageous for your business.
• Terms of Engagement: It takes a lot of work to select a Non Executive Director. As a result, the process of choosing a Non Executive Director would take a long time. At Chhota CFO, we would make sure that a Non Executive Director’s appointment went smoothly and without a hitch. Such appointment processes would be streamlined in accordance with the needs of the business. We will customize the appointment to meet your needs.