Role of non-executive directors in corporate governance

In the article there is an analysis of the non-executive director’s legal status and functions, including independent one, within the one-tier corporate governance structure in Ukraine. The study aims to examine the powers of non-executive directors, the scope of their functions, and the criteria for independence, to provide a clear understanding of their role in corporate governance in Ukraine. Author establishes that a director in a one-tier corporate governance structure is an individual elected by the general meeting of shareholders to the board of directors and assumes the official from the moment of election, regardless of the title. The article defines non-executive directors as members of the board of directors who perform control and risk management functions regarding the corporation’s activities and those of the executive directors. The fulfilment of these functions by non-executive directors contributes to balanced corporate governance. Author explores that the independence of a non-executive director involves the absence of any relationship with the corporation and compliance with other independence criteria determined by legislation, the corporation’s charter, and/or board regulations. Author also concludes that a shareholder can be elected to the position of a non-executive director, if this does not contradict the corporation’s charter, and/or board regulations. Author examines the conditions and criteria under which a shareholder elected as a non-executive director can be considered independent. The study demonstrates that the text of Law № 2465-IX contains an error technicus, which complicates the ability of shareholders within a one-tier structure to correctly apply the legal norms regarding independence criteria. Finally, risk management is identified as a key function of non-executive directors, which includes several stages: risk identification, analysis, evaluation, the implementation of risk mitigation measures, and monitoring the effectiveness of these measures. This ensures compliance with legislation and the protection of shareholders’ rights, including minority shareholders, and other stakeholders of the corporation. The article significantly contributes to a better scientific understanding of the role and functions of non-executive directors.