Non-executive directors—independence
Produced in partnership with Advanced Boardroom Excellence
Non-executive directors—independence

The following Corporate guidance note Produced in partnership with Advanced Boardroom Excellence provides comprehensive and up to date legal information covering:

  • Non-executive directors—independence
  • Executive and non-executive directors
  • UK Corporate Governance Code
  • Indicators of independence
  • Assessing independence
  • Guidance on independence—PLSA
  • Guidance on independence—PIRC
  • Guidance on independence—ISS
  • Guidance on independence—Glass Lewis
  • Threats to independence
  • more

The concept of independence is key to provisions in the UK Corporate Governance Code (UKCG Code) on board effectiveness, including on board and board committee composition. Non-executive directors (NEDs) of listed companies and, in particular, independent NEDs, have distinct roles and responsibilities in the corporate governance arena. This Practice Note considers the test of independence and the significance of independent NEDs in the governance of a listed company.

The term ‘listed company’ in this Practice Note means a UK public company that has any class of its securities admitted to the Official List maintained by the Financial Conduct Authority (FCA) and admitted to trading on the Main Market of the London Stock Exchange (LSE) or the NEX Exchange Main Board (formerly ISDX Main Board). For the purposes of this note, references to UK companies are to companies incorporated in England and Wales, Scotland and Northern Ireland (but not the Channel Islands or the Isle of Man).

This Practice Note also highlights relevant guidance to boards and advice to investors, including:

  1. the Financial Reporting Council (FRC)'s Guidance on Board Effectiveness, which was updated in July 2018;

  2. guidance issued by the Chartered Governance Institute (previously known as ICSA: The Governance Institute)

  3. the UK Shareholder Voting Guidelines, published by Pensions Investment Research Consultants Ltd (PIRC), available for purchase from PIRC's website

  4. the Stewardship Guide and Voting