Directors

Directors' duties

All directors, namely the executive directors (EDs), non-executive directors (NEDs) and independent non-executive directors (INEDs), are collectively responsible for the issuer’s management and operations. Directors have to fulfil their duties both collectively and individually. An individual director may be liable (through the collective liability of the board) for the issuer’s Listing Rule breaches, even if that director did not participate in the relevant conduct that led to the issuer’s breach, or the breach arose from a part of the issuer’s business or operations that was not covered by that director’s role.
All directors are subject to the same duties under the law and the Listing Rules. Among other duties, directors must (i) act in the interest of the issuer and avoid any actual or potential conflict of interest; (ii) apply such degree of skill, care and diligence as may reasonably be expected of a person with such director’s knowledge and experience; and (iii) comply with the Listing Rules and procure the issuer’s compliance with the Listing Rules (and other relevant laws and regulations).
To properly discharge their duties, it is not sufficient for directors, regardless of their position or role, to only attend to the issuer’s affairs at formal meetings (e.g. board meetings). Each director must take an active interest in the issuer’s affairs and have a general understanding of the issuer’s business. This includes following up on any issues that come to a director’s attention.
While the duties under the Listing Rules are the same for all directors, EDs, NEDs and INEDs fulfil different roles and functions within an issuer.

Chair of the board

Executive directors

Non-executive directors and independent non-executive directors

NEDs are not part of an issuer’s management and are not considered independent. INEDs are independent NEDs who fulfill the independence criteria under the Rules. As with EDs, NEDs and INEDs have to fulfil their duties as directors both collectively and individually.
While EDs are normally industry practitioners or experts in the issuer’s business, NEDs and INEDs provide valuable skills and experience (e.g. legal, accounting, real estate and IT) to enhance the board’s balance of skills and expertise and further promote a diversity of perspectives on the board.
NEDs and INEDs have to be able to devote sufficient time to their role to meaningfully contribute to the board. Potential candidates should carefully consider whether their existing commitments allow them to devote such time and effort before accepting a new board appointment.
NEDs and INEDs should ensure that they have a sufficient understanding of the issuer’s business and affairs to monitor and scrutinise the issuer’s performance in achieving its goals and objectives and oversee the issuer’s risk management and internal control systems.
To discharge their duties, NEDs and INEDs need to have access to timely and quality information. An issuer’s management should provide all members of the board with such information, and if it fails to do so, then any director is entitled to and should request for that information . Such information may include (where available) monthly management accounts and management updates, background or explanatory information relating to matters to be brought before the board, copies of disclosure documents, budgets, forecasts and other relevant internal financial statements.
As the independent voice on the board, INEDs are key to the effective functioning of the board. Issuers must have at least three INEDs and INEDs must constitute at least one-third of the board. In addition, the Listing Rules require the remuneration committee and the audit committee to be chaired by INEDs (the nomination committee has to be chaired by the board chair or an INED).
INEDs fulfil important roles on the board, including:
- Bringing independent judgement to bear in board meetings on issues of strategy, policy, performance, accountability, resources, key appointments and standards of conduct.
- Taking the lead where potential conflicts of interests arise.
- Supervising the issuer’s risk management and internal controls.
- Serving on the board committees (if invited).
- Scrutinising the issuer’s performance in achieving agreed goals and objectives, and monitoring performance reporting.
- Acting as a pivotal contact point on the board for shareholders and investors (see also the section on the Lead INED).

To learn more on topics relevant to the INEDs' exercise of their roles and duties, please visit the relevant subpages of the Exchange’s INED Corner as well as “A Snapshot of INEDs’ Roles and Responsibilities” published by the Exchange. Please also refer to the section titled Specific requirements for INEDs for specific regulatory requirements for INEDs.