The role of Non-Executive Directors in entrepreneurial companies
While counselling and monitoring are still felt to be typical roles for Non-Excecutive Directors, long-term strategic planning and provision of wider industry knowledge and contacts are also crucial, an ACCA survey of UK NEDs reveals.
The survey of ACCA's 200-strong Non-Executive Directors database – which provides NEDs for growing companies - found that keeping sight of the bigger picture so as to steer the company in the right direction was vital, as executives often got swamped by day-to-day issues. Keeping management on track was a common theme as it was felt that classic entrepreneurs could take a somewhat cavalier approach and not conduct appropriate risk assessment. However, more emphasis is now given to NEDs providing broader industry contact and therefore assisting in the development of new business.
When looking at the process of a small company seeking a listing, the survey revealed that over 60% said management teams in unlisted companies had 'little idea' as to the costs and responsibilities involved. Nearly half of the respondents estimated the typical cost for a company coming to market as between £400,000 and £500,000.
Other key findings of the NEDs survey included:
- Nearly 70% said their fees had not increased over the last two years
- Three-quarters said the requirements of the Combined Code were 'onerous but manageable'. Only 15% said they were too prohibitive for businesses to consider seeking a full or AIM listing.
- Most believed that NEDs should spend, on average, 2 days a month at their companies. Some even went as far as 4-5 days per month.
Allen Blewitt, ACCA Chief Executive commented, "It is interesting to find that the role of NEDs seems to be expanding to incorporate not only the traditional advisory position, but also strategic business development. The role of the NED appears to be changing with more focus on NEDS bringing their wider industry knowledge and contacts to the business.
"But our survey clearly shows there is work needed to make sure management is fully aware of the costs and responsibilities of becoming a listed company. This is particularly so, given that floating, either on AIM or the full company market typically now costs up to £500,000. The small cap, unlisted and AIM sectors are crucial for the UK 's economic outlook and we need to make sure they receive the best advice."
For more information contact:
Ian Welch, Head of Corporate Communications, ACCA
+44 (0) 20 7059 5729
Victoria Jonson, Senior Policy Advisor, ACCA
+44 (0) 20 7059 5726