Responsibilities Of The Non-Executive Directors

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Question :

What is a non executive director, and what are the roles of non executive directors when appointed to a company board?. In your presentation you are to address the following issues:

• What is the definition of a non executive director in Australia?

• What are the qualifications of non executive directors, or is there no qualifications required?

• Why do companies appoint such directors, and what is their role in the company in which they are appointed?

• Explain out the duties and responsibilities expected of directors who are appointed into the role of non executive director.

• How does the appointment of non executive directors fit in with good corporate governance within a company? Explain what corporate governance is, and what is expected of a company.

• What is the liability of non executive directors within the company, do they have less liability than other directors?

• Is there any interesting commentary in ASIC, ASX, the media, or any other organisation regarding the duties and role of non executive directors?

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Answer :

Role of Non-Executive Director in Organizations


Today, with increased globalization and increased market competition, the organizations need to look for senior-level and experienced people that can serve well to the organization. They can be the CEOs, or the Board Members, or the Managing Directors or even the Non-Executive Directors of the firm. It will help the organization to decide the future strategies considering the challenges present in a given working environment.

Non-Executive Director in Australia

A Non-Executive Director is a member of the company's Board of Directors who will be a part of the non-executive team. He will be not involved in the daily work routines but will be involved in the key policy-making activities of the organization. One should note that they are not the employees of the organization and will not be affiliated directly with the organization (Bekiris & Doukakis, 2011). They will be a part of the monitoring team to determine not only the performance of the organization but also determine the performance of Managing and other Executive Directors of a given organization. 

Qualifications of Non-Executive Director

It is important for the Non-Executive Directors to have sufficient experience of working for the organization before they perform this role. They can be MBAs, Chartered Accountants, Financial Analysts, and even Engineers. However, to become a Non-Executive Director, they need to have certain attributes that include - independent, passionate, mature, well-rounded, supportive, intelligent, smart, entrepreneurial, and challenging by nature (Bekiris & Doukakis, 2011). 

They need to demonstrate a strong character in a given working environment. Also, they need to overview the needs and the current performance of the organization from a holistic perspective. It will help them overcome the challenges and subsequently will help them improve the overall efficiency of the business practices and processes in a given working environment. 

They need to work in close collaboration with all the departments and also with the Board Members so that they can design the roadmap for the future (Cheung et al., 2011). It will also assist them in formulating key policies for the organization.

Need for Non-Executive Directors in Organizations

There are several needs of Non-Executive Directors in the organization. These will include - designing the policies of the organization in alignment with the corporate governance, developing a mindset across the organization that will empower employees to perform as per the expectations of the organization, provide training to the staff to improve their productivity levels, solve the questions and issues of different stakeholders of the organization, ensure commitment levels that will help the organization to adhere to the regulatory requirements, overcome market challenges, and also allow the organization to capture the untapped opportunities prevailing in the market (Bekiris & Doukakis, 2011). 

These Non-Executive Directors are responsible for formulating company’s strategy, performing as per the needs of the organization, and also training the middle-level management to make them perform in their daily work routines (Bekiris & Doukakis, 2011). They will be also handling the key tasks of identifying the major risk factors and accordingly developing the risk mitigation plan for the organization. It will thereby help them achieve desired objectives in a given environment.

Roles and Responsibilities of Non-Executive Director

The major roles and responsibilities of the Non-Executive Director in the organization is to formulate the strategies as per the needs of the organization, scrutinize the performance and determine the gaps in the practices, identify the risk factors, install controls and design the risk mitigation system in a given work environment, and also help the stakeholders in solving their queries (Bekiris & Doukakis, 2011). 

The Non-Executive Directors need to identify the resources, allocate them to the different teams, ensure Ethical Code of Conduct, and thereby focus on achieving required objectives of the organization. Also, they need to associated with the Board Members to address specific concerns, identify the performance levels in alignment with other competitive companies, and thereby deploying strategies for all the functional departments of the organization (Bekiris & Doukakis, 2011).

Key to Corporate Governance: Appointment of Non-Executive Director

The Non-Executive Directors will be a part of not only the policy-making team but also the monitoring team of the organization. They will be evaluating the performance of not only the companies but also of the Board members and other senior management teams of the organization. They can thereby determine the major issues faced by the organization (Bekiris & Doukakis, 2011). 

Also, they can conduct an audit of all he activities performed in the organization. It will thereby help them overcome the issues by formulating required strategies in the organization. They need to first understand the principles of corporate governance and accordingly frame the strategies in the organization (Bekiris & Doukakis, 2011). It will thereby help them achieve required objectives in a given working environment.

Liability of Non-Executive Director

There are no direct liabilities for the Non-Executive Director in the organization. However, if it is explicitly mentioned they will be liable for - tax, debts of the company, company's contrast, refund of share application money, pay for qualification shares, fraudulent issues if found any, and dishonored checks if conducted in the organization (Young & Thyil, 2014). It is thereby important for the Non-Executive Directors to determine their role and specific their liabilities explicitly toward the organization.


This report has provided an in-depth discussion about the roles and responsibilities of the Non-Executive Directors. They are vital members of the senior management team of the organization. Also, they are assigned with heavier roles and responsibilities to make the organization perform as per the needs. They need to formulate policies to ensure that the organization is adhering to the rules and regulations, employees are following the Ethical Code of Conduct, and further ensure achieving of required objectives for the organization in a given challenging work environment (Young & Thyil, 2014).

It is the responsibility of all the stakeholders of the organization to work in accordance with the Non-Executive Directors and collaborate with them to ensure that they can overcome the present working challenges and will be able to achieve desired objectives in a given working environment.