How the Role of Non-Executive Directors Differs Across the UK, US, and EU

By Adrian Lawrence FCA, founder of NED Capital · Part of the Board Governance Hub

As boards and directors increasingly operate across borders, the differences between governance systems matter in practice. A non-executive director who has served on a UK board cannot assume the role works the same way in New York or Frankfurt — the legal duties, the board structure, and the surrounding culture all vary. For companies appointing internationally, and for directors considering roles abroad, understanding these differences is essential. This guide compares the non-executive director role across the three systems, from a UK starting point.

The Common Foundation

Before the differences, the shared ground. In all three systems, the non-executive director exists to provide something the executives cannot: independent judgement. Across the UK, US and EU, NEDs are expected to be free of the day-to-day running of the business, to challenge and monitor management, to bring outside experience to strategy, and to serve on the committees — audit above all — that scrutinise the areas where executive self-interest is most acute. Independence is the common currency everywhere, and the audit committee staffed by independent directors is a near-universal feature of listed-company governance. The differences are in how each system structures and enforces that shared purpose.

The United Kingdom: Unitary Board, Comply or Explain

The UK operates a unitary board: executive and non-executive directors sit together on a single board, share the same legal duties, and take collective responsibility for the company. There is no separate oversight body — the non-executives provide the oversight from within the same board they sit on. The general duties of all directors, executive and non-executive alike, are set out in the Companies Act 2006, including the duty to promote the success of the company and to exercise independent judgement.

Layered on top, for premium-listed companies, is the UK Corporate Governance Code, maintained by the Financial Reporting Council. Its defining feature is that it operates on a comply-or-explain basis: it is not law, but companies must either follow its provisions or explain to shareholders why they have not. This principles-based, flexible approach is characteristically British — it sets high expectations while allowing boards to justify departures — and it is quite different from the more prescriptive US model. The Code expects at least half the board, excluding the chair, to be independent non-executive directors, and it emphasises the separation of the chair and chief executive roles. For financial-services firms, the FCA’s Senior Managers and Certification Regime adds personal regulatory accountability for certain senior board roles.

The United States: Unitary Board, Rules and Litigation

The US shares the UK’s unitary board structure — a single board of directors, most of whom are typically independent — but the governance framework around it feels markedly different. Where the UK leans on principles and comply-or-explain, the US is more rules-based and prescriptive, and operates in a far more litigious environment where the threat of shareholder lawsuits shapes board behaviour.

The pivotal legislation is the Sarbanes-Oxley Act of 2002, passed after the Enron and WorldCom scandals, which sharply increased directors’ responsibilities for financial oversight and imposed strict requirements on audit committees. Overlaid on this are the listing standards of the New York Stock Exchange and Nasdaq, which mandate a majority of independent directors and require that the audit, compensation and nominating committees be composed entirely of independent directors, with the Securities and Exchange Commission enforcing the federal securities-law framework above it all. Two cultural differences stand out for a UK observer. First, it remains far more common in the US for one person to hold both the chief executive and chair roles — a combination the UK Code actively discourages. Second, the US model is more explicitly oriented towards shareholder value, which tends to focus non-executive attention on financial performance and share price to a greater degree than the UK’s more stakeholder-aware framing.

The European Union: Not One System, but Two-Tier Is Key

The most important thing to understand about the EU is that it is not a single governance system. There is no unified EU framework for non-executive directors; instead, EU directives — on shareholder rights, non-financial reporting and board diversity — set common expectations, while corporate governance itself is determined at member-state level, each with its own company law and governance code.

The defining structural difference from the UK and US is the two-tier board, used most prominently in Germany and the Netherlands. In a two-tier system, the company has two separate boards: a management board that runs the business, and a supervisory board that oversees it. Non-executive directors sit on the supervisory board, which is entirely separate from — and appoints and monitors — the management board. This is a sharper structural separation of oversight from management than the UK or US unitary model achieves, because the two functions sit on genuinely different bodies rather than the same one.

A further distinctive feature, again most associated with Germany, is co-determination: the requirement that employees be represented on the supervisory board, in larger companies up to half its members. This gives the German supervisory board a stakeholder composition unlike anything in the UK or US, where employee board representation remains rare. Not all EU states use the two-tier model — France and Spain, among others, permit or use unitary boards, and some allow companies to choose — which is precisely why the EU cannot be summarised as a single system. The common thread is the emphasis, reinforced by EU directives, on independence, transparency and, increasingly, diversity and sustainability.

The Differences That Matter in Practice

Drawing the comparison together, a few differences matter most for anyone appointing or serving internationally.

Board structure. The UK and US use unitary boards; much of the EU, led by Germany, uses two-tier boards where non-executives sit on a separate supervisory board. This changes the NED’s relationship to management fundamentally — from a colleague on the same board to a member of a distinct oversight body.

How governance is enforced. The UK’s comply-or-explain flexibility contrasts with the US’s rules-based, litigation-backed prescription and the EU’s patchwork of national codes under common directives. A director used to the UK’s principles-based approach will find the US framework more rigid and the consequences of getting it wrong more legalistic.

Chair and CEO roles. The UK strongly separates them; the US frequently combines them. This alone changes the balance of power a non-executive operates within.

Whose interests are foremost. The US model is more explicitly shareholder-centric; the UK is more stakeholder-aware; and parts of the EU, through co-determination, formally build employee interests into the board itself. These are differences of emphasis rather than absolutes, but they shape how a non-executive weighs competing interests.

What This Means for Board Appointments

For a company appointing non-executive directors, these differences carry real weight. A director whose entire experience is of the US shareholder-value, combined-chair model brings assumptions that may not fit a UK unitary board operating under comply-or-explain with a separate chair — and vice versa. International board experience is genuinely valuable, but it is not automatically transferable, and boards recruiting across borders need to understand which aspects of a candidate’s experience will translate and which will not.

This is where specialist knowledge of the UK system, and of how it differs from others, matters in appointment. At NED Capital we focus on UK board appointments and understand precisely what the UK unitary board and Corporate Governance Code require of a non-executive director — including how to assess international candidates against the demands of a UK role. Every search is led personally by Adrian Lawrence FCA, a Fellow of the ICAEW and former listed-company finance director. To discuss an appointment, our NED recruitment service is the place to start, and our guide on how to appoint a non-executive director sets out the process in more detail.

NED Capital | Sister practice of FD Capital | ICAEW practising certificate held by Adrian Lawrence FCA.