A boardroom with 21st century NEDs. A diverse and inclusive offshore board.

The 21st Century NED and what they offer your board

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If boards reflect the world today, the 21st century NED is a fusion of corporate past, present, and future. Mark Hucker explains.

“This entity is a bit complex for us – you’re the experts, can we approve these documents?”

I heard these words when I was an Executive Director approximately 16 years ago.  The NED asking the question was a highly respected and high-profile individual in the island on dozens of Boards. We paid him at least £5,000 per annum for the privilege.

A lot has changed since 2004. Partly this has been a matter of regulation. The JFSC issued its Guidance Note in February 2009 (Natural persons undertaking the activity of acting as a director under the Financial Services (Jersey) Law. This placed a prima facie limit of six directorships above which an individual would need to register as a service provider.

Regulatory changes

However, just as important, the recognition that the risks and responsibilities of being a director can be onerous. So, therefore require proactive and informed engagement from all members of the board.  The 2009 Guidance Note is clear that NEDs are “on the hook” in the event of disaster: “…the FS(J)L does not distinguish between directors and non-executive directors and each individual director is equally liable within a board context …”

Liability at Board level for 21st century NEDs

Having seen the role of a non-executive Chairman of a regulated business in the aftermath of a JFSC investigation and Public Statement (even before fining became the order of the day), it throws up two questions. Do you have the independence, skills and knowledge as a 21st century NED to understand and manage the risks the company is running? And, are you earning enough for the risks as well as the “normal” time commitment?  £5,000 pa can never be enough!

Understanding the risks and responsibilities of working as a 21st century NED

Despite the regulatory focus on NEDs, there is still scope to improve how we select and recruit the right talent. 

Appointing a NED for your board can come down to who you know. There is still an emphasis on finding ‘a friend of the business’ rather than identifying someone who provides a constructive, independent challenge to the executives.  It is easy to create a conflict of interest by the ‘gift’ of a well-paid position which leaves the NED unlikely to challenge a dominant director until it is too late. This is like junior co-pilots who do not intervene to prevent a crash because of overconfidence of a senior colleague.

Improving the diversity of offshore Boards

Many offshore Boards still dream of diversity, whether its skills, experience, gender, or ethnicity. White, middle-aged males, often from an accounting or legal practice background continue to dominate Boards.  This is changing but very slowly and there are considerable barriers to change. When one of the regulated entities of which I was Chief Executive went to recruiters with a specific brief to find a female director, one of them responded: “I know you have specified a woman but I have a really excellent male candidate I’d like to recommend…” 


How can Club NED help?

Club NED makes a real difference to Boards and candidates by:

  • Opening up a much wider pool of talent to businesses looking to appoint a NED. This can also apply for validating an internal candidate.
  • Helping speed up change towards diversity by giving a real choice of candidates across skills, gender, ethnicity and experience.
  • Helping to find scarce skills in specialist sectors such as hedge funds, charities and private equity.
  • Enabling businesses to show they are undertaking a disciplined and transparent recruitment process like for other positions in the company.
  • Improving independence, quality and professionalism among NEDs in all sectors.
  • Enabling candidates to showcase their skills and experience even if they do not have industry contacts to be approached directly.

Of course, none of this will happen immediately. However, it feels like we are on a journey and further transformation will need new tools.

Club NED might just be a good place to start towards the next 16 years of Board governance. We are well placed to help offshore organisations recruit 21st century NEDs for the post-pandemic world.

Ready to become a 21st century NED? Join our world.

“You should ask yourself two important questions: Do you have the independence, skills and knowledge as a 21st century NED to understand and manage the risks that the company is running, and are you being remunerated for the risks as well as the “normal” time commitment?” 

Author profile

Mark Hucker has been an Executive Director with regulated businesses in Jersey and other jurisdictions over the past 22 years. He has extensive experience across the Funds, Investment, Banking and Fiduciary sectors. And he has also been a NED on many fund and company boards over that period.

Mark now specialises in director-level recruitment at Kendrick Rose, Jersey.

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