Non-Executive Director Appointment Letter

What is an appointment letter for a non-executive director?

An appointment letter is a formal document used to officially appoint a person to the position of a non-executive director in a company. The appointment letter will contain the terms and conditions of the non-executive director's appointment.

A non-executive director is a director who is not involved in the day-to-day running of the company but takes part in board meetings and director votes.

Is it mandatory to have an appointment letter for a non-executive director?

No, it is not mandatory to have an appointment letter for a non-executive director. However, it is recommended to have one as it clearly outlines the duties and responsibilities that will be expected of the non-executive director within the company. This is particularly important as the non-executive director will not be involved in the day-to-day running of the company, it is therefore necessary to have clarity of what roles they will perform within the company.

What are the prerequisites for an appointment letter?

Before an appointment letter can be issued, the non-executive director must have first been offered the position and they in-turn should have granted their consent or acceptance of the offer. The acceptance can either be given orally or written format.

Who cannot be appointed as a non-executive director?

An appointment letter cannot be given to a person who is not statutorily permitted to be a director. Such categories of people include:

• A person who is under 16 years of age;
• A person who is bankrupt;
• A person who does not have mental capacity to act as a director; or
• A person who has been disqualified from being a director in the UK.

What has to be done once an appointment letter for a non-executive director is ready?

The document should first be signed by the Chief Executive Officer (or equivalent) of the company. Then it should be sent or presented to the person to be appointed as a non-executive director. They should then read, sign and date the document in the presence of a witness, who should also sign the document and provide the details required in the signature block. Thereafter, copies should be given to both parties.

Which documents should be attached to an appointment letter for a non-executive director?

The key company policies (e.g. code of conduct, expense policy, holiday policy, health and safety policy) can be attached to the appointment letter.

Is it necessary to register an appointment letter for a non-executive director?

No, it is not necessary to register the appointment letter for a non-executive director, as they will not be involved in the day-to-day running of the company.

Is it necessary to have witnesses for an appointment letter for a non-executive director?

The signing of the appointment letter should be witnessed by valid witnesses. A valid witness will be someone who is at least 18 years old and not a relative of any of the parties.

What must an appointment letter for a non-executive director contain?

The appointment letter must contain:

• The name of the non-executive director;
• The date of the letter,
• The duration of the appointment;
• The role and responsibilities of the non-executive director;
• The salary of the director; and
• Termination and notice periods.

Which laws are applicable to to an appointment letter for a non-executive director?

Companies Act 2006

Employment Rights Act 1996

The Data Protection Act 2018

Help from a lawyer

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The lawyer can answer your questions or help you through the process. You will be offered this option when you complete the document.

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