UK company law has no separate category of non executive director. Anyone on the board is a director, and the general duties in sections 171 to 177 of the Companies Act 2006 apply to them in full. What differs is the job: a non executive is not running the business day to day, so the law measures them against what a reasonably diligent person doing that oversight role would have done, and also against the knowledge and experience they personally bring.

Does the law treat a non executive differently from an executive director?

No. Section 250 of the Companies Act 2006 says that “director” includes any person occupying the position of director, by whatever name called. Section 170(1) says the general duties in sections 171 to 177 are owed by a director of a company to the company. Nothing in either section carves out a lighter regime for someone described as non executive, independent, part time or nominee.

The Financial Reporting Council makes the same point from the other direction. Its guidance on the UK Corporate Governance Code says executive directors have the same duties as other members of a unitary board, and that those duties extend to the whole of the business, not just the part covered by their executive role. The board is collectively responsible, and every member carries the same legal duties.

Administratively there is no difference either. A non executive is appointed and notified to Companies House in the same way as any other director under section 167G, which includes a statement that their identity is verified, and section 167M makes it an offence for an individual to act as a director unless their identity is verified. See appointing a director and Companies House identity verification.

How does the duty of care apply to someone who mainly attends board meetings?

Section 174 requires a director to exercise reasonable care, skill and diligence, and defines that as the care, skill and diligence of a reasonably diligent person with two things:

  • the general knowledge, skill and experience that may reasonably be expected of a person carrying out the functions carried out by that director in relation to the company (the objective minimum); and
  • the general knowledge, skill and experience that the director actually has (which can only raise the bar).

The first limb is where the non executive role shows up. A non executive’s functions are oversight functions: reading board papers properly, asking questions, testing management’s proposals and following up when answers are unsatisfactory. They are not expected to know every operational detail, but they are expected to do the oversight job competently. The second limb means a non executive who is, say, a chartered accountant chairing the audit committee will be judged against what someone with that background would have spotted in the numbers.

The same two part test appears in section 214(4) of the Insolvency Act 1986 for wrongful trading, and section 214(5) adds that the functions taken into account include functions entrusted to the director even if they did not actually carry them out. A non executive who accepts a role, such as chairing a committee, and then does not perform it is still measured against it.

What do non executives actually do?

For companies listed in the commercial companies category or the closed ended investment funds category, the FRC’s UK Corporate Governance Code 2024 sets the expectations on a comply or explain basis. Principle H says non executive directors should have sufficient time to meet their board responsibilities and should provide constructive challenge, strategic guidance, offer specialist advice and hold management to account. Provision 13 gives them a prime role in appointing and removing executive directors, and Provisions 24 and 32 expect the audit and remuneration committees to be made up of independent non executives.

The Code does not apply to private companies, although large private companies within the Companies (Miscellaneous Reporting) Regulations 2018 must disclose their governance arrangements, and the FRC points them to the Wates Principles. In a typical owner managed company a non executive is more often an investor’s representative, a retired founder or an experienced outsider brought in to add discipline. The legal duties are identical whichever route brought them to the board.

What makes a non executive independent, and does it change their duties?

Independence is a governance concept rather than a separate legal status. Provision 10 of the Code lists circumstances likely to impair independence, including employment by the company within the last five years, a material business relationship within the last three years, additional remuneration beyond a director’s fee or membership of the share option, performance related pay or pension scheme, close family ties, representing a significant shareholder, and more than nine years’ service. Provision 11 says at least half the board, excluding the chair, should be independent non executives, and Provision 34 says non executive pay should not include share options or other performance related elements.

The key legal duty here is section 173: every director must exercise independent judgment. A nominee non executive appointed by an investor owes their duties to the company, not to the investor who put them there. Section 173(2) only permits restrictions on their discretion that come from an agreement duly entered into by the company or from the company’s constitution.

Which liabilities can a non executive face?

  • Claims for breach of duty brought by the company, a liquidator or, in some cases, a shareholder through a derivative claim. See directors’ duties under the Companies Act 2006.
  • Wrongful trading under section 214 of the Insolvency Act 1986, where a director knew or ought to have concluded there was no reasonable prospect of avoiding insolvent liquidation or administration and did not take every step to minimise creditors’ losses. See wrongful trading.
  • Disqualification under section 6 of the Company Directors Disqualification Act 1986 where conduct as a director of an insolvent or dissolved company makes the person unfit; the minimum period is two years and the maximum fifteen. See director disqualification.
  • Defective accounts: under section 414(4) every director who knew the approved accounts did not comply, or was reckless about it, and failed to take reasonable steps to prevent approval commits an offence.

Section 232 makes void any provision exempting a director from liability for negligence, default, breach of duty or breach of trust, and restricts company indemnities, but section 233 allows the company to buy insurance for its directors against those liabilities. Section 1157 lets a court relieve an officer wholly or partly where they acted honestly and reasonably and ought fairly to be excused. See director indemnities for what a company can and cannot cover.

How can a non executive show they did the job properly?

The evidence that protects a non executive is usually in the board pack and the minutes. The FRC guidance says non executives need timely, high quality information sufficiently in advance of meetings and should seek clarification where information is inadequate. It also says the company secretary should make sure directors, especially non executives, have access to independent professional advice at the company’s expense where they judge it necessary. Code Provision 8 says unresolved concerns about the running of the company should be recorded in the board minutes, and a non executive who resigns with such concerns should give the chair a written statement for circulation to the board.

A non executive’s letter of appointment is a director’s service contract for the purposes of section 228, so a copy must be kept available for members to inspect. See directors’ service contracts.

How are non executive fees taxed?

HMRC’s Employment Status Manual at ESM4040 says a company director holds an office, so earnings from a directorship are chargeable as employment income and subject to Class 1 National Insurance. The exceptions are narrow: certain nominee directors and directors who are members of a professional partnership, where conditions in EIM02500 onwards are met. In practice non executive fees normally go through the company’s payroll rather than being invoiced as self employed income.

What does this look like in practice?

Illustration only. A retired finance director joins the board of a manufacturing company as its only non executive. Over three meetings the management accounts show cash falling while the managing director describes trading as “on plan”. She asks for a thirteen week cash flow forecast, asks for it to be minuted that the forecast is overdue, and when it arrives she questions the debtor assumptions. If the company later failed, a liquidator would compare her conduct with what a reasonably diligent non executive with a finance director’s experience would have done. The minuted questions, and her insistence on a forecast, are what show she met that standard. Saying she was “only non executive” would not help her.

What mistakes do non executives make?

  • Assuming the title limits personal liability. It does not; only the facts of the role and the director’s own skills shape the standard.
  • Approving accounts or major transactions on the strength of a summary without reading the underlying papers.
  • Acting as an investor’s mouthpiece rather than exercising independent judgment for the company.
  • Not checking whether the company holds directors’ liability insurance before accepting the appointment.
  • Invoicing fees as self employed income when they are earnings from an office.
  • Raising concerns in conversation but never getting them into the minutes.

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Reviewed by Christine Anderson, Broker, Solar Protect. Last reviewed 8 October 2026. Part of Accountapedia, the Solar Protect guide to UK tax and accounting. This page is general information, not personalised advice.