What Does an Outside Director Do?

Non-executive directors, also known as outside directors, refer to directors who have no other contractual relationship with the company except as directors. In August 2001, the China Securities Regulatory Commission issued the "Guiding Opinions on Establishing an Independent Director System for Listed Companies", which provided for the meaning of independent directors, independence standards, qualifications for appointment, and procedures and obligations. ^[1]

Non-Executive Director

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With these things in mind, you need to think about how you, as a member of the board, will be involved. If the board has also considered the above matters and appointed you with reference to the detailed description of the board s expectations for the appointment of independent non-executive directors, then you can rest assured that the board s duties to independent directors are well thought out and when accepting appointment You will not misunderstand the expectations of the board. The terms of appointment, including terms of office and fees, are generally listed in the letter of appointment.

Non-executive director independence

Independence refers to a mental state. Only if you hold a sincere belief can you know whether or not you will show and reflect independence. From a minimum requirement, making an independent decision requires fair consideration of all existing relevant data. At the same time, it is not affected by direct or indirect personal interests. You must honestly answer whether there is any private benefit (regardless of the method and form) that affects your judgment.

Non-Executive Director Confidentiality and Declaration of Interest

Because of the working relationship, the company's confidential information and known things should be kept confidential as directors and should not be disclosed to third parties without the company's authorization. You should also declare all interests to the board and waive voting rights on matters that have already been declared. This is especially important for directors to maintain an impartial position on matters of conflict of interest.

Non-executive directors know the company and its business

As a non-executive director, you will know less about the company and its business than the executive director, but this is by no means a negative factor. Your relevant experience and experience in the same or similar industries will complement each other. In any case, in order to make thoughtful and realistic decisions about these business matters within the board of directors, it is necessary to take the time to understand the company's business, business rivals, and operating environment. In this regard, companies often arrange for newly appointed board members to understand the above.

Non-executive director monitoring and management

The board of directors is responsible for monitoring the management, because the board of directors is ultimately responsible for the compliance of the management and the company with the established systems, procedures and plans. As a non-executive independent director, you should and can play one or more roles to ensure that the company and management can implement these systems, procedures and plans. Your role can be tailored to your personality, preferences, experience, and background.

Your contribution can even be purely the company's belief that you can provide objective opinions. In addition, you can take the initiative to raise questions and suggest new views on the Board. Serving committees, such as monitoring committees, is also a way to monitor and manage. Finally, you will find that when other members have sufficient trust and respect for you, you can become a confidant or ambassador of other members, and when necessary, you can play a role in enhancing understanding and communication. The above are just some of the main roles, not just that.

Contribution of Non-Executive Directors to Company Profits

The board of directors is responsible for the company's business performance. To fulfill this responsibility, the board should focus on formulating strategies, developing codes and setting the direction of the company and its business. As a non-executive independent director, you can actively participate in the board of directors to play a role in the performance of the above business performance for the board of directors, and bring your professional knowledge and or common sense, experience, expertise, vision and You can get information about the outside world and / or personal and business relationships with the outside world to the board of directors to assist the board of directors in solving related problems.

Non-Executive Director Strategy

It is the company's responsibility to adopt strategic procedures to formulate the company's long-term strategic plan. These strategic plans can analyze the performance of the company and the performance of the long-term market in a market-based manner. In addition, they can first analyze the external environment and then analyze the company's internal strength and weakness competition to assist in formulating policies and plans . Strategy agility is an iterative process that relies mainly on existing data. The prospects of a company are the visions drawn from directors and senior management. This requires extremely innovative behavior. This responsibility for innovation depends on the ability of directors and senior management to develop a suitable strategic approach.

Non-Executive Director Policy

Corporate policies are formulated by the board of directors to ensure that all business plans and important decisions are consistent with corporate strategy. Companies need to develop their strategies for the important decisions they make in each of their businesses. This includes: marketing policies, customer relationships, product development, operating systems, finance, personnel management, investor relations, social responsibility, etc. to reflect the nature of the company's organization.

Each board category has a set of policies for subordinates. For example, each company may have a specific set of market strategies and prices, quality, product safety, restrictions on competitive advertising, etc. The personnel management policy may include arrangements for salary, employee benefits, compensation for fees, employee agreements, guarantees and retirement benefits.

Matters related to board policy must be determined or proposed by the board of directors at least, but the final decision still needs to retain the board's consistent structure and style. Policies are published in the company code. This policy manual generally requires periodic review to ensure that the company's policies are in line with the company's strategic direction.

Actual results of non-executive directors

As a non-executive independent director, the actual effectiveness of the two roles of corporate supervision and performance depends on many factors, such as the expectations and views of your board of directors on your technology, training and knowledge. To be effective, you need to be careful about appointments at the outset, honestly reflecting the independence you can achieve and the time you can set aside to learn the company's business and prepare for and participate in board meetings. As a member of the board, you must indicate how you can assist the board in fulfilling its responsibility to ensure that the company complies with its systems, procedures and plans, and to meet its performance requirements. To do this, you need to understand that your role is not one-sided, but it does not mean that you need to work around the clock like a wheel (although sometimes, expressing the principles you insist on in writing or even resigning ). You can be a mediator, a bridge, a messenger, and your value is that you contribute to the company with your knowledge, experience, and expertise. You must always be constructive and professional in behavior. Of course, to be effective, you must gain and maintain the trust and respect of other members of the board of directors, otherwise no matter how correct you are, it will not help.