Executive and Non Executive Director : Meaning, Differences, Requirements
Meaning of Executive Director
An Executive Director is the working director of an organization whom we can say a full-time employee. It is also known as inside or internal director. Generally, it has a specified role in finance director, marketing operations etc on regular basis. This term is more popular in non-profit organizations than commercial enterprises. The care standard needed from executive directors is very much higher than that needed for Non- executive directors. However, both types of directors are equally significant and liable under tax laws. In this article, we will let you know Executive Vs Non-Executive Director and what are the requirements of these two. If you want further details regarding Directors and Remunerations of directors as per Companies Act, 2013 then you can follow our blog. For registering company click here:What is Non-Executive Director
A Non- Executive Director is the Non- working director of an organization which does not come under the category of an Executive director. Therefore, he/she does not participate in the day-to-day activities of the firm. But he/she may participate in the planning process and policy-making process. Sometimes, included lending prestige to the firm as a benefit of his standing in the community. The company expects the non- Executive director to monitor and challenge the performance of the executive directors and the management. Further, they are also expected to take a determined stand in the interests of the firm and its stakeholders. They are equal in term of liability to the executive directors under certain statutory requirements such as tax laws.Executive Vs Non-Executive Director
Following are the differences between Executive Vs Non-Executive Director:- Usually, an Executive Director is an employee of executive functions in the management and administration of the company. On the contrary, Non- executive directors are independent of corporate management.
- The directors have the first priority to rely on is the management of the corporation. The board will not inform about the details of how the corporation is managed.
- There is a requirement of the degree of skill for an executive director. Whereas Non-executive directors are not bound to be continuous attentive towards the affairs of the corporation.
- The executive director has the powers of managing on a regular basis that is exercisable without reference to the board as a delegated executive function of management. Other than managing director, appointment carries no express or implied the grant of executive power.
- Executive director if other than a managing director may depend on whether he has some feature of the company's constitution or conduct of the company in general meeting or not. Besides, the delegation of executive function evidence by the board of directors operating as an executive of the company. Given below are the requirements of Executive Vs Non-Executive Director:
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