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When should a company consider retaining a NED?

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by GetNED Publications

When should a company consider retaining a NED?

by GetNED Publications

When should a company consider retaining a NED?

When a company reaches a consensus to retain a NED, it is already too late!

The UAE’s regulatory and business landscape is increasingly complex. NEDs add significant value to any operating business, through a detailed and practical understanding of processes, governance and best practices expected from all successful firms.


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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.

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