Non-Executive Director

Posted in Finance, Accounting and Economics Terms, Total Reads: 953

Definition: Non-Executive Director

A non executive director, also known as outside director or external director is the one who instead of being a part of the executive team, monitors the activities of the executive directors.

He does not take part in the day to day activities of the management but is engaged in policy making and planning exercises. Other than planning and strategic actions, he is also responsible to act in the interest of all stakeholders. Although they are not the part of the executive team, they might face liabilities with the executive directors of the organization.

Non-executive directors on the board due to reasons like status also because their status and position in the society could provide good reputation for the firm as well. Difference between an Executive and Non Executive Director

Executive directors have a role of primary management and leadership in the organization. They engage in day to day activities of the firm. on executive directors have a less hands on role and might also have lesser experience than the executive team but they bring objectivity and external awareness to the board. They share the same legal duties and responsibilities as that of the executive directors.

Their role is vied as that of an observer, whistle blower, ensuring adherence to good practice and taking care of stakeholder’s interest.


Hence, this concludes the definition of Non-Executive Director along with its overview.

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