Non-executive director framework design for cross-border shareholders

Non-executive director framework design is the work of setting out, in writing, how outside directors sit alongside executive management once a company operates across more than one jurisdiction. It becomes relevant the moment a board adds a non-executive to a structure whose constitutional documents were drafted for a single shareholder group and say nothing about independence, information rights or removal. Done properly, the result is a set of rules the board can point to, not a set of assumptions everyone happens to share.

A holding company with shareholders in three countries appoints two non-executive directors to satisfy an investor side letter, then discovers the articles give the board no mechanism for briefing them, no defined information flow, and no rule on what happens if one of them also sits on the board of a competitor. The gap is not solved by the resolution that appointed them, and it tends to surface only once someone on the board asks a question nobody drafted an answer for.

The sections below set out when this work is needed, what it produces, and – because the perimeter matters as much as the deliverable – what it deliberately leaves out.

The situation this work addresses

Most boards that need a non-executive director framework have already appointed the directors. The framework is not what gets someone onto the board; it is what tells that person, and everyone around them, what the seat actually carries once they are on it. Without it, a non-executive operates on the same information rights as an executive, with none of the independence a shareholder side letter or a governance code assumed the seat would carry.

The pattern repeats across cross-border structures with more than one shareholder class: a private equity investor wants board-level visibility without board-level control, a family group wants an outside voice without giving that voice a veto, a joint venture wants a tie-breaker who is genuinely independent of both sides. In each case the constitutional documents were written before the need was clear, and the framework has to be built onto a structure that was not designed to carry it.

The work therefore starts from the company's existing constitution and its shareholder arrangements, not from a template. Two companies with the same investor and the same non-executive appointment can need materially different frameworks, because the point of friction sits in different places – one in the information the executive board is willing to share, the other in a removal mechanism nobody thought to draft.

What triggers non-executive director framework design and why the timing matters

The most common trigger is an investment round or a shareholder agreement that requires an "independent" director without defining what independence means for that company. A close second is a group restructuring that brings previously separate boards under one holding company, producing non-executives who sit on more than one board within the same structure, with duties that can pull in different directions. A jurisdiction-specific version of this work, covering an appointment inside the Abu Dhabi Global Market, is set out here: non-executive director framework design in the Abu Dhabi Global Market.

Timing has a consequence that is easy to miss. Once a non-executive director has been formally appointed and has attended a board meeting under whatever rules happen to exist, the position they occupy is fixed from that date, and any gap in the framework runs from that first meeting, not from the date someone notices it. A dispute about information rights or independence months later is judged against what was actually in place when the director started, not against what the board meant to put in place.

The company law of most jurisdictions gives a board wide latitude to design this internally, through the constitution and a service or appointment letter, rather than through a fixed statutory template. That latitude is the opportunity: a framework built before the next appointment costs far less to get right than one reconstructed after a disagreement has already happened.

What the engagement produces, in sequence

The work proceeds in a fixed order, because each stage depends on the answer to the one before it.

• A review of the current constitutional documents and any shareholder agreement, identifying every clause that touches board composition, information rights or removal
• A written statement of what "non-executive" and, where relevant, "independent" mean for this specific board – tied to the company's own shareholder structure, not a general definition
• A marked-up set of constitutional amendments and appointment letter terms that give the framework legal effect, rather than leaving it as an internal understanding
• A board information protocol setting out what non-executives receive, when, and through what channel
• A short memorandum on regulatory exposure across the jurisdictions the group operates in, flagging where local company law imposes anything additional on the role

The board resolution that formally adopts the framework is itself a discrete document, and what it needs to record is addressed separately: the board resolutions required for a non-executive director framework. The sequence above matters because the third item cannot be drafted correctly until the second is settled, and the fifth is only useful once the first four are fixed – a jurisdictional flag against an undefined role produces nothing the board can act on.

If a non-executive has already been appointed and the appointment letter is silent on information rights or independence, the gap does not close by itself. It sits open until someone drafts around it, and by then a disagreement has usually already started.

Review your appointment terms. Write to info@hreithlaw.com with the jurisdiction and the structure.

Where this differs by jurisdiction

The core design choices – what independence means, what information a non-executive receives, how removal works – are set by the company's own constitutional documents in almost every jurisdiction across a cross-border structure, not by a statute that dictates the answer. Where jurisdictions differ is in how much room the local company law leaves the board to make those choices, and in what a registered office or local registry expects to see once the appointment takes effect.

In some jurisdictions, an appointment of this kind must be reflected in a regulatory filing within a period that runs from the date of appointment itself, not from the date the framework is finalised. Once that period lapses, the option to have the filing coincide quietly with a wider annual update ceases to be available, and the appointment appears on the public record as a stand-alone entry instead. A framework drafted without checking which regime applies risks being internally consistent and externally exposed – correct on paper, silent on a filing the local registry already expected.

Several jurisdictions also attach specific duties or liability standards to a non-executive that differ from those attaching to an executive, and a small number treat the two categories identically in law regardless of what the company calls the role. Confirming which position applies is a discrete step in the work, not an assumption carried over from the jurisdiction where the parent company sits.

What this service does not include

This engagement does not include acting as, supplying, sourcing or arranging a non-executive director, a company secretary, a nominee shareholder or a trustee. It does not include any activity for which a trust or corporate service provider licence is required, in any jurisdiction. That boundary is not a matter of preference: acting as, or arranging for another person to act as, a director for someone outside one's own group is a licensed activity in a number of the jurisdictions covered by this practice, and a firm without that licence cannot lawfully offer to do it, regardless of how the request is phrased.

What the engagement does include is everything a board needs before an appointment is made or a framework is adopted: the constitutional documents reviewed and marked up, the independence and information criteria set in writing, the appointment terms drafted and checked against the shareholder agreement, and the regulatory exposure across the group's jurisdictions assessed and put in front of the people who have to sign off on it. A separate comparison of what sits inside and outside this perimeter across services is set out here: the engagement perimeter compared.

Frequently asked questions

Does non-executive director framework design change for a foreign-owned company?

Yes, in one respect that is easy to miss. A foreign-owned company's non-executives often also carry duties under the parent's own governance code, and the local framework has to be written so the two do not contradict each other, rather than assuming one automatically satisfies the other.

What does non-executive director framework design require in practice?

A written definition of the role, a documented information protocol, and terms in the company's constitutional documents and appointment letter that give both legal effect – not a description in a board pack that nobody has formally adopted.

Who inside the company is responsible for non-executive director framework design?

The board as a whole adopts it, but the chair or the company secretary usually holds the pen, because they are the ones who have to apply the information protocol at every subsequent meeting.

What evidence should the board keep on non-executive director framework design?

The board resolution adopting the framework, the appointment letter referencing it, and a record of what information was actually sent to the non-executive and when. The record matters more than the framework itself if independence is ever challenged.

What happens if non-executive director framework design is not addressed?

The non-executive defaults to whatever the constitution already says about directors generally, which in most structures means full executive-level information rights and no independence safeguard at all – the opposite of what the appointment was meant to achieve.

A related question, whether the constitution needs a full review or only a targeted amendment, is addressed separately: when an articles of association review is actually necessary. Where the group already carries a resident director requirement in one jurisdiction and is now adding a non-executive layer in another, the two roles need to be reconciled in writing, or the framework designed for one jurisdiction quietly contradicts an obligation running in the other: the resident director requirement across jurisdictions.

A framework adopted after the first non-executive has already sat through a board meeting is drafted around whatever happened at that meeting, not around what the board actually wanted. Confirming the terms now, before the next appointment, keeps that choice open.

Review your appointment terms. Write to info@hreithlaw.com with the jurisdiction and the structure.

Dana Kessler, expert author, focuses on board structure and governance design for cross-border groups. She advises boards on constitutional documents, non-executive frameworks and the allocation of duties between directors operating across more than one jurisdiction. Her work centres on translating shareholder arrangements into terms a board can actually apply once an appointment has been made.