Defining the role and responsibilities of a non-executive director Essay

Harmonizing to concern, non-executive manager is known as non-working manager of a house who is non an executive and besides does non take part in the daily direction of the house. Non- executive manager normally involved in planning and policy devising and sometimes included to impart prestigiousness to the house due to their standing in the community. Besides that, non-executive manager are expected to supervise and dispute the public presentation of the executive manager and the direction and to find base in the involvement of the house and its stakeholders. They are by and large held every bit apt as the executive manager under certain statutory demands such as revenue enhancement jurisprudence. There are two different type of study has been discussed for non-executive manager ( 1 ) Cadbury study ( 2 ) Higgs Report.

Cadbury study is officially entitle “ The Report of the Committee on the fiscal Aspect of Corporate Governance ” was published in December 1992, followed by the recommendation of the Cadbury Committee. The constitution of the Committee in May 1991 by the Financial Reporting Council, the London Stock Exchange and the accounting profession arose in response to the happening of fiscal dirts in the 1980 ‘s affecting UK listed Companies, which led to a autumn investor assurance in the quality of company ‘s fiscal coverage.

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As such the Committee addressed the fiscal facet of corporate administration and the later produced a Code of Best Practice, the proviso which make them belief that all board of UK listed companies should follow with. The cardinal focal point proviso of the Code of Best Practice related to the composing of the Board of Director ‘s, the assignment and independent of non-executive managers, the service contract and wage of executive manager and company ‘s fiscal coverage and controls.

Harmonizing to Adrian Cadbury, there are certain ground have been highlighted for non-executive manager. ( 1 ) The non executive manager broaden the strategic position of board with a widen company vision ‘s. ( 2 ) The non-executive manager guarantee that the board ever have their on the involvement of the company. Besides that, non-executive manager besides good placed to assist in deciding possible struggles between the involvement of the executive and those of the stockholders. ( 3 ) Non-executive manager have a clear function in naming, monitoring and if necessary replacing the main executive and in measuring the executive squad. ( 4 ) Non-executive manager besides conveying consciousness of the external universe and the ever-changing nature of public outlook to board treatments.

Purpose of naming non-executive managers is foremost to supply the board with cognition, objectiveness, judgement and balance, of a sort and to an extent which may non be available if the board consists merely of full clip executives and secondly to guarantee that the public presentation of the executive manager and the direction of the company are up to the criterion required.

Adrian Cadbury focused on the processs necessary for the choice and assignment of non-executive manager in ways that are strict and will add value to the board. He proposed four phases to the choice procedure. ( 1 ) Is a demand to place spreads in experience, personality, age and accomplishments round the board tabular array, and so make up one’s mind what sort of individual would outdo complement the attributed on the bing board members. ( 2 ) to establish a purposeful hunt for campaigner who meet the in agreement demand with a emphasis on the importance of competition and of holding more than one campaigner to take from, in order to happen the best available campaigner from the point of position of effectivity and because it gives confident to managers take in this manner. They take their topographic point at the board tabular array on equal footings with their follow board members. ( 3 ) Board as a whole should be involved in both stairss. There is a clear advantage in working with fellow board member who has had say in taking them. Equally of import, it leads to common regard. The executive managers reach the board in competition with their fellow executive and demand to cognize that the non-executive manager were chosen by the same path, openly and no virtue. Otherwise, new outside manager have to play them in to get the better of the intuition that they are at that place mostly as friends of the president or worse in return for a favours. ( 4 ) There needs to be some agencies of measuring the public presentation of the board as a whole and of the single managers. Boardss can non cognize whether they are every bit effectual as they might be without set abouting some signifier of appraisal. It is through such an rating that gaps in board rank are identified.

Harmonizing to the Higgs Report, commissioned by the British Government and published in January 2003. The focal point of this study is on “ Review of the function and effectivity of non-executive manager. Base on Higgs Report, the description of the function of the non-executive manager is proposed for incorporation into the Code. Besides that, counsel is offered for non-executive managers on how to maximise their effectivity. The non- executive manager should run into as a group at least one time a twelvemonth without the president or executive manager present and the one-year study should include a statement on whether such meetings have occurred. Meanwhile, the anterior to appointment, possible new non-executive manager should transport out due diligence on the board and on the company to fulfill themselves that they have the cognition, accomplishments, experience and clip to do a positive part to the board. Therefore, the counsel on pre-appointment is due to diligence offered. Besides that, the duties of non-executive manager are base on scheme, public presentation, hazard, and people. Strategy is base on the part to the development of company scheme. Non-executive manager should analyze the public presentation of the direction in run intoing in agreement ends and nonsubjective and monitoring, and where necessary removing, senior direction and in sequence planning. Non-executive managers should fulfill themselves that the fiscal information is accurate and that fiscal control and systems of hazard direction are robust and defendable. They should be competent plenty to supervise the unity of the fiscal statement of an organisation and be able to reexamine important fiscal coverage judgements. They should besides reexamine the company ‘s fiscal control systems and look into the effectivity of the whole systems. Non-executive manager are responsible for finding appropriate degrees of wage of executive manager and have a premier function in naming, and where necessary removing, senior direction and in sequence planning. Besides that, the study besides proposes certain restriction which would be placed on the figure of chairmanships which could be held. Role of Non-executive manager has change in term of the board, the president, the function of non-executive manager and many more.

Composition of the board

Higgs Report requires that the board should include a balance of executive and non-executive managers. This is to guarantee that no person or group can rule the wide ‘s determination devising. In the board, non-executive managers must consist non less than tierce of the board and a bulk of the non-executive managers should be independent.

Audit Committee

Higgs study emphasizes the importance of audit commissions. The Code comprises at least three members of all whom should be independent non-executive managers. The wage commission should hold delegated duty for puting wage for all executive managers and the president. The commission should besides put the degree and construction of compensation for senior executives. Besides that, the non-executive manager should name on all three principal board commissions such as audit, nomination and wage.


Base on the comparing between Cadbury study and Higgs Report the drift for alterations came from major fiscal institutes concerned by the hapless quality and truth of fiscal coverage which threatened to underpin investor confident. The publication of Cadbury codification in 1992, were issued a scope of recommendation for good corporate administration in a Code of Best Practice. Many of these recommendation applied to UK listed companies were aimed at bettering fiscal coverage, the effectivity of the board, the rights of managers in acquiring information and their handiness to information peculiarly to the services of the company secretary and other professionals. Besides that the codification is based on openness, unity and answerability. The boards of managers are accountable to their stockholders and both play their portion in doing that answerability effectual. The codification includes the function of the board of managers, non-executive managers, executive managers and the method for fiscal coverage and control. Meanwhile, Higgs Report is concentrating on the function and effectivity of non-executive managers. This is to increase the answerability of the boards. This is because the board should put the company ‘s value and criterions and guarantee that it is duties to it are stockholders and other ‘s are understood and met. The effectual non-executive manager is to continue the highest ethical criterions of unity and probity. Besides that, it besides support executive in their leading of the concern while supervising their behavior. Meanwhile, it besides promotes the highest criterions of corporate administration and seeks conformity with the commissariats of the Code wherever possible.

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Question 2

What is the name of the Company and when does the fiscal twelvemonth terminal?

The name of the Company is Malayan Flour Mills Berhad. The fiscal twelvemonth ended for Malayan Flour Mills Berhad on 31 December 2009.

Where is the registered office of the Company?

The Registered Office of the Company is at 22nd Floor, Wisma MCA, Jalan Ampang, 50450, Kuala Lumpur.

When and where was the AGM held?

The Company ‘s 49th Annual General Meeting ( AGM ) was held on 17 June 2010 at the Auditorium, 3rd Floor, Wisma MCA, Jalan Ampang, 50450, Kuala Lumpur.

What was ( were ) the particular intent ( s ) of the AGM?

Proposed Amendments to the Articles of Association of the Company ( Special Resolution )

Were there any proceedings which require particular notice to be given? What are they?

Proposed Amendments to the Articles of Association of the Company

How many yearss ; notice was given for the particular notice ( if any ) ?

21 clear yearss

How many yearss notice was given for the AGM?

16 clear yearss

Who are the hearers of the Company?

Messrs KPMG

Who is ( are ) the Company Secretary ( Internet Explorers ) ?

Mah Wai Mun is the Company Secretary of Malayan Flour Mills Berhad.

What do you see is the function of the Company Secretary ( Internet Explorers ) ?

Company Secretary is the officer appointed by the managers of a house as responsible for guaranting that house ‘s legal duties under the corporate statute law are complied with. The responsibilities of Company Secretary include ( 1 ) naming meetings, ( 2 ) entering proceedingss of the meetings, ( 3 ) maintaining statutory record books, ( 4 ) proper payment of dividend and involvement payments and ( 5 ) proper outlining and executive of understandings, contracts and declarations.

In what manner ( s ) did the managers retire from office?

The retirement of manager ‘s are been done by rotary motion. ( Page 5 to page 8 )

What statutory declaration was given by the managers? Why do you believe this is necessary?

The Director chiefly responsible for the fiscal direction of Malayan Flour Mills Berhad, do solemnly and unfeignedly declare that the fiscal statements set out on pages 39 to 87 are to the best of his cognition and belief, correct and the manager make this solemn declaration scrupulously believing the same to be true and by virtuousness of the commissariats of the Statutory Declarations Act, 1960.

What did you detect was ( were ) the functions of the Non-executive managers?

In the Annual Report, it clearly stated the functions and maps of the Board including the executive and non-executive managers are defined in the Board Charter which regulates how concern is to be conducted by the Board in conformity with the rules of good Corporate Governance. The company has a unitary Board, presently dwelling of four executive manager and five non-executive manager. The presence of the Independent non executive managers fulfills a polar function in corporate answerability and provides indifferent, nonsubjective and independent position, advice and judgement to the determination doing procedure of the Board. For the place of independent non-executive manager, the Nomination Committee besides evaluates the campaigner ‘s quality, credibleness and necessary accomplishment and experiences to convey an independent judgement and position to count under consideration.


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