Chapter 6 - NED Effectiveness

Question 1

What causes and ineffective NED

Answer 1

Lack of knowledge about the company’s business

Insufficient time spent with company

Defects in decision-making process

Ineffective challenge

Question 2

Provision H (Code)

Answer 2

NEDs should
Have sufficient time
Provide constructive challenge
Provide strategic guidance
Offer specialist advice
Hold management to account

Question 3

FRC Guidance on Board Effectiveness says that to be effective, NEDs should:-

Answer 3

1. Devote time to full, comprehensive, tailored induction to understand company, concerns, culture
2. Have sufficient time
3. Develop and refresh knowledge and skills to make a positive contribution
4. Insist on high-quality info. To allow sufficient challenge at meetings
5. Seek clarity when information is insufficient/inadequate
6. Meet sharehokder/stakeholders to understand the business and relationships.