15 December 2009
Executive Director are special director and are in full time employment of the company and are assigned particular work/department. Even a whole-time Director (WTD) as per explanation to Sec 269 can be included in executive director.
Non-executive director is not in full time employment, he may be a professional director or independent director.
Maximum remuneration to non-exe director is 1% of net profit (if company has MD or WTD) or 3% (in other cases)
As regards duties, non-exe director attracts general duties of a director, but executive director attracts general as well as special duties u/s 5. There are 7 person (in priority) who are called officer in default u/s 5. MD/WTD is on number 1 and 2 and other executive directors comes to number 6. All other director (including executive director) comes to number 7.
Hence, as a conclusion, executive director has more duties (and hence liabilities) then non-executive.
The chief executive officer has the overall, primary management and leadership role in the organisation. Therefore, the CEO must have extensive knowledge and skills in a wide variety of areas
A non-executive's role is less hands-on. A non-executive director may have less experience and less knowledge than an executive. However, the benefit here is that a non-executive can bring objectivity and an external awareness to the board.
Non-executive directors are not usually involved with day-to-day management, however, the smaller the company, the more likely it is that there will be some hands-on work.
The non-executive's role is an over-viewer and whistle blower, ensuring adherence to good practice, respect for the interests of other stakeholders and adherence to the process of boardroom discipline. Non-executives are often thought of as "advisers" although this is not the case. The role is larger than this - the non-exec is a director and shares the legal duties and responsibilities of the executive directors.
As far as corporate governance is concerned, non-executives are usually associated with Independence and may be self employed.
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