How can a NED contribute to a high growth company?

What can a NED contribute to a high growth company?

Non-executive (or independent) directors (“NED/s”) play a key-role in the proper running of operating companies at all stages of the company’s commercial development. By providing in-depth knowledge and a soundboard to both management and principal(s), NEDs help companies improve their corporate credibility and governance standards, and by doing so, the company accelerates their growth and value creation process.

Rather than looking into ‘executive direction’, they focus on board matters, providing an independent and impartial view of the company that is dissociated from the day-to-day business running.


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NEDs and Economic Substance (“ESR”)

Pursuant to ESR, certain companies deploying a “relevant activity” have to demonstrate that they have effective substance in their jurisdiction by satisfying a so-called “economic substance test”. ESR is in force in the UAE since 30th April 2019.

A company meets the test if it is directed and managed in the UAE and has adequate people, premises and expenditure in the country.

In this context, the composition and competence of the board of directors – composed of both executive director(s) and NED/s –, and the proper recording of minutes of all board meetings are key factors when assessing whether a company is compliant or not.