Business Structures & The role and contribution of the NED within companies”

Question 1

Liability (A key consideration)

Answer 1

Directors and Officers Liability Insurance
(often calledD&O) is liability insurance payable to the directors and officers of a company, or to the organization(s) itself

Question 2

List the Types of business?

Answer 2

Sole traders
Limited companies
Business partnerships
unincorporated associations

Question 3

what are Sole Trader?

Answer 3

sole trader’ means you’re responsible for the business,

not that you have to work alone.

Question 4

what are the Legal responsibilities of sole trader?

Answer 4

You’re personally responsible for: any losses your business makes bills for things you buy for your business, like stock or equipment keeping records of your business’ sales and spending

Question 5

What is a Limited Company?

Answer 5

A limited company is an organisation that you can set up to run your business.
- It’s responsible in its own right for everything it
does and its finances are separate to your personal
finances.
- Any profit it makes is owned by the company, after
it pays Corporation Tax. The company can then share
its profits. (Dividend)

Question 6

what is a Ownership limited company?

Answer 6

Every limited company has ‘members’ - people or orga
nisations who own shares in the company.
Directors are responsible for running the company.

Question 7

Most limited companies are ‘limited by shares. TRue or false? and what does this mean?

Answer 7

True
This means that the shareholders’ responsibilities for the company’s financial liabilities are limited to the value of shares that they own but haven’t paid for.

Question 8

what are the benefits of limited company?

Answer 8

Company directors aren’t personally responsible
for debts the business can’t pay if it goes wrong,
as long as they haven’t broken the law.

Question 9

what are the other types of companies and decsribe each type?

Answer 9

Private company limited by guarantee: Directors or shareholders financially back the organisation up to a specific amount if things go wrong.

Private unlimited company
Directors or shareholders are liable for all debts
if things go wrong

Public limited company
Companies where shares are traded publicly on a market, like the London Stock Exchange.

Question 10

what happens in an ordinary business partnership?

Answer 10

In a business partnership, you and your business partner (or partners) personally share responsibility for your business.

Question 11

what are the Legal responsibilities of ordinary partnership?

Answer 11

You’re personally responsible for your share of:
•any losses your business makes
•bills for things you buy for your business, like stock or equipment

Question 12

what occurs in a Limited liability partnerships?

Answer 12

The partners in a limited liability partnership aren’t personally liable for debts the business can’t
pay.

Their liability is limited to the amount of money they invest in the business.

Limited liability partnerships are most often set up by professional services firms, like solicitors or accountants.

Question 13

what occurs in a limited partnership in terms of liability?

Answer 13

The liability for debts that can’t be paid in a limited partnerships is unequally shared by its partners.
This means:
‘general’ partners can be personally liable for all
the partnerships’ debts
‘limited’ partners are only liable up to the amount
they initially invest in the business

Question 14

What are NEDs?

Answer 14

A non-executive director (NED, also NXD) or outside director is a member of the board of directors of a
company who does not form part of the executive
management team.

Question 15

(NEDs) They are not employees of the company or affiliated with it in any other way and are differentiated from inside directors. TRUE OR FALSE?

Answer 15

TRUE

Question 16

Non-executive directors are sometimes considered the

same as an independent director. TRUE OR FALSE?

Answer 16

TRUE

Question 17

What are the respobsibilitites of NEDs?

Answer 17

Strategy:
Non-executive directors should constructively challenge and contribute to the development of strategy
Performance:
Non-executive directors should scrutinise the
performance of management in meeting agreed goals and objectives and monitoring and where necessary removing senior management, and in succession planning.
Risk:
Non-executive directors should satisfy themselves that financial information is accurate and that financial controls and systems of risk management are robust and defensible
People:
Non-executive directors are responsible for determining
appropriate levels of remuneration of executive directors and have a prime role in appointing and where necessary removing senior management, and in succession planning

Question 18

NEDs should also provide independent views on what?

Answer 18

Resources
Appointments
Standards of conduct

Question 19

what are the special allocated responsibilities?

Answer 19

Diversity and Ethnicity
Board Subcommittees
Task forces
Workforce

Question 20

Structures Within the NEDs?

Answer 20

The Chair
The SID (Senior Independent Director)
The Committees
– Audit
–Remuneration
–Quality Governance

Question 21

How are NEDs selected?

Answer 21

Independent
Not by peers
Governors  (Governors vs NEDs)
Tenure
Actors and Equity
Experience vs out of touch