Non Executive Director Agreement Template for the United Arab Emirates

When appointing non-executive directors to your UAE company board, you need a comprehensive agreement that complies with local corporate governance laws and protects both parties' interests. A Non Executive Director Agreement serves as the foundational contract governing the relationship between your company and independent board members, ensuring adherence to Federal Law No. 32 of 2021 and corporate governance standards.

When do you need this document?

You require this agreement when appointing independent directors to strengthen your company's governance structure. Listed companies on Dubai Financial Market or Abu Dhabi Securities Exchange must comply with specific board composition requirements, including minimum numbers of independent non-executive directors. Financial institutions, banks, and insurance companies operating under UAE Central Bank or Insurance Authority regulations need formal agreements to document director appointments and ensure regulatory compliance. Large private companies seeking international investment or preparing for public listing also use these agreements to demonstrate robust governance frameworks. Additionally, family businesses transitioning to professional management structures require formal director agreements to clarify roles and responsibilities.

Key legal considerations

Your agreement must clearly define the director's independence criteria according to SCA Resolution No. 3/RM of 2020, which sets specific standards for non-executive director qualifications. The document should outline fiduciary duties, including duty of care, loyalty, and good faith obligations under UAE company law. Remuneration structures must comply with shareholder approval requirements and regulatory limits on director fees. Confidentiality clauses are essential to protect sensitive company information, while indemnification provisions should balance director protection with accountability requirements. The agreement must address potential conflicts of interest and establish procedures for disclosure and management of such situations. Insurance coverage for directors' and officers' liability should be specified, along with the company's obligation to maintain adequate coverage throughout the appointment term.

Legal requirements in United Arab Emirates

Under Federal Law No. 32 of 2021, your agreement must specify the appointment duration, which cannot exceed three years for each term, with possible renewal subject to shareholder approval. The document must outline minimum and maximum board meeting attendance requirements, typically not less than 75% of annual meetings. For listed companies, the agreement must ensure compliance with corporate governance codes requiring at least one-third of board members to be independent non-executive directors. Directors must meet specific qualifications including UAE residency requirements, professional experience criteria, and absence of disqualifying factors such as bankruptcy or criminal convictions. The agreement should reference applicable disclosure obligations under Securities and Commodities Authority regulations, including requirements for directors to disclose share ownership and related party transactions. Termination provisions must align with company law requirements and specify grounds for removal, including breach of fiduciary duties or failure to meet independence criteria.