Guides
Can you be on a board but not as a company director?
Can you be on a board but not as a director? Technically, yes, but don’t go down that road until you’ve taken some key considerations.
Here are the key points:
- A board may contain members who are not directors – typically at the committee level.
- Having non-directors act as board members or advisors can help enhance innovation and decision-making.
- But, defining the roles and responsibilities of such board members is critical.
- Every board member – director or non-director – should have the same information at board meeting time to ensure accurate decision-making.
Can you be on a board but not a director?
Yes. It may come as a surprise, but there are cases where individuals can be board members but not hold the title of director.
So, what are the roles and responsibilities of such positions, and what does it mean to be on the board but not to be a director?
The distinction between board members and directors
All directors are board members, but not all board members need to be directors.
Directors are the legally defined group of individuals entrusted with full fiduciary responsibility and voting powers, with significant sway over the company’s directions.
Occasionally, they may invite others to sit on the board in an advisory capacity or expertise-based role. These people won’t have the full responsibility and voting power of directors, but they will still be board members.
Who are these non-director people?
They often overlap, or are synonymous, with board advisors – they are chosen primarily because they know what they’re talking about.
Usually, they are more senior employees – often part of the management team – and directly involved in the company’s day-to-day running. Sometimes, they are external advisors on hand to deal with a specific area where the board needs more expertise.
What powers do they have?
While they can’t vote, they do have influence that reflects the trust that the board has put in them.
Non-director board members will often become members or leaders of select board committees. These committees are dedicated to exploring specific opportunities or managing specific risks or problems, and the non-director board member will be able to offer valuable insights.
Sometimes, the board may entrust a non-director with certain decision-making powers in their area of expertise if they deem it the best course of action. But this is case-by-case and, if it’s done right, extremely dependent on thorough evaluation.
Can you be on a board but not a director without restriction?
No. It depends on the country and the organisation. Some businesses don’t allow it. It’s one of the many things you need to consider as a director looking to bring in advisors for extra help.
Why do this at all?
Having board members complemented with advisors can be helpful because they bring more diverse perspectives and innovative thinking.
Such specialised advice can be handy in more complex industries or where the organisation has specific challenges.
Additionally, having more non-directors on boards helps spread the decision-making load. Going down this road, you may need to balance “sharing the load” with the need to avoid “too many cooks”, but there is a way you can do it right.
Other directors, particularly non-executive directors, may thank you.
How do I bring in non-director board members correctly?
The most important rule is to bring non-directors to the board only when you’ve done the proper preparation.
Item one on that list is deciding whether it’s within the rules to bring in a non-director/advisor and whether it’s vital. Maybe directors could resolve an issue independently; they just don’t know it because they haven’t drilled into the details.
If you decide to take one, clearly define the roles and responsibilities of such board members and advisors. What can they do, and what can’t they do? It will help ensure efficient decision-making.
It’s essential at this point to know about each non-director’s legal responsibilities to the company. They’re not set in stone like directors; they’re looser – based on subjective analysis and current needs. Navigating that is tricky without proper communication and details in writing.
If you have an employee as a non-director, ensure they know they will still be treated as one despite their position on the board.
When it comes to candidate selection, ensure no conflict of interest is connected to potential decision-making. Ensure they are a good fit with the right passion and experience. In other words, Recruitment 101 applies here as much as anywhere else.