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

The following Corporate practice 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
  • Board composition
  • Other significant requirements
  • Indicators of independence
  • Assessing independence
  • Guidance on independence—PLSA
  • Guidance on independence—PIRC
  • Guidance on independence—ISS
  • 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.

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

  4. the Stewardship and Voting Guidelines 2021 published by the Pensions and Lifetime Savings Association (PLSA)

  5. the 2021 United Kingdom and Ireland Proxy Voting Guidelines published by Institutional Shareholder Services (ISS)

  6. the 2021 Proxy Paper Guidelines published by Glass Lewis

For information on the principles and provisions of the UKCG Code regarding the appointment of executive and non-executive directors of listed companies and the key principles to be applied by the nomination committee when selecting and recommending candidates, see Practice Note: Appointment and re-election of directors—UK listed companies—corporate governance aspects, which also examines related issues such as

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