Non-executive Director's Letter of Appointment

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What is it?

A Non-executive Director's Letter of Appointment is a letter to appoint a director of a company, who is not involved in the day-to-day management of the company.

Why do you need it?

When you appoint a non-executive director you need to carefully set out your mutual obligations and terms of service, and this can be done with the Non-executive Director's Letter of Appointment.

Drafting a Non-executive Director's Letter of Appointment is important because despite not being involved in the day-to-day operations of the company, there will be certain decisions the non-executive director will be involved in, such as policy and direction related decisions. It is therefore important to clarify the non-executive director's scope of involvement, responsibilities and obligations.

The Non-executive Director's Letter of Appointment is a great way to layout clear directorship terms, laying the foundation for a mutually rewarding relationship between the company and director. The non-executive director will also need to confirm his acceptance of the terms of the appointment by signing on the letter.

Key clauses to watch for:

When drafting a Non-executive Director's Letter of Appointment, it is important to focus on a number of key clauses, in particular:

  • Duration of the appointment;
  • The Director's duties;
  • Amount of remuneration; and
  • How to deal with potential or actual conflict of interest.

Non-executive Director's Letter of Appointment Document

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