Letter – Appointment of Non-Executive Director

What is a letter of appointment of a non-executive director and when should you use it?

This is a Letter of Appointment for a Non-Executive Director  (NED) of a private limited company.

It’s not the same as an agreement to appoint an advisor for the company or an executive director, although there are similarities in the two roles.

The appointment of a non-executive director is a contract for services and not a contract of employment.

However, Revenue expects companies to pay non-executive directors’ fees to them (as “officeholders”) under PAYE in the same way that they would be paid if it were employment income.

This template therefore has been drafted to provide for payment of those fees to be made under PAYE.

The template also provides that fees for additional separate consultancy services provided to a company by a non-executive director may be paid gross.

There is no legal distinction between executive directors and non-executive directors, and a non-executive director will have the same legal duties and responsibilities as any other director under the Companies Act 2014.

The distinction lies in the role that they perform.

Non-executive directors are independent advisors or supervisors who stand back from the day-to-day running of the business.

Instead they scrutinise and assist the executive directors in their strategic decision-making process.

Exactly what this entails will vary from company to company, depending on what is required at each stage of a business’s development.

They will usually only devote a portion of their time to the business.

Whilst non-executive directors are particularly appropriate in larger companies, in a SME or new business, a non-executive director might act as an entrepreneurial mentor whose presence provides an experienced guiding voice.

A non-executive’s details will need to be filed with the CRO in the usual way on Form B10.

If you want to use a more formal agreement then check out our contract for services agreement

What else you might need

For more information on what to do and how to hire a director, our guide to appointing a director/non-executive director can help.

If you want to appoint an advisor and not a statutory director, you should use our separate advisor agreement template.

And if you’re appointing an executive director, on a full- or part-time basis, you’ll need our separate template director’s service contract