Non-executive director case studies
As well as being competent and diligent, non-executive directors must exercise independent judgement. They must act in good faith, in a way that promotes the success of the company for the benefit of its members as a whole. In so doing, they need to consider not only the interests of shareholders but also the interests of other stakeholders such as employees and the wider community.
Meeting these duties and responsibilities is likely to give rise to ethical considerations which need to be managed to protect an individual's reputation and ensure that high standards of business conduct are maintained. ICAEW, together with the other CCAB bodies, has developed a number of illustrative case studies on common ethical issues encountered by professional accountants working as non-executive directors.
The case study includes:
- To be or not to be a non-executive director
- Formal governance procedures not being followed
- Confidentiality and conflict of interest in non-executive roles
- Non-executive director being used as a sounding board by an employee
- Pressure on a non-executive director to make a decision without adequate information
- Withholding information from the non-executive directors