Non Executive Director Agreement Template for New Zealand
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What is a Non Executive Director Agreement?
The Non Executive Director Agreement is a crucial governance document used when appointing independent directors to a company's board in New Zealand. It is essential for establishing clear parameters of the non-executive director role while ensuring compliance with the Companies Act 1993 and other relevant legislation. The agreement is designed to protect both the company's and the director's interests by clearly defining responsibilities, remuneration, time commitments, and governance obligations. It includes specific provisions for confidentiality, conflicts of interest, and indemnification, while carefully maintaining the distinction between non-executive directorship and employment. This document is particularly important for companies seeking to strengthen their corporate governance through independent board oversight.
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About the Non Executive Director Agreement
A Non Executive Director Agreement is a specialised governance contract that formalises the appointment of independent directors to your company's board. This document establishes the legal framework for the director's role while ensuring compliance with New Zealand's corporate governance requirements under the Companies Act 1993 and Financial Markets Conduct Act 2013.
When do you need this document?
You need this agreement when appointing independent directors who will provide oversight and strategic guidance without participating in day-to-day management. This is essential for listed companies seeking to meet NZX listing requirements, private companies implementing robust governance structures, or businesses preparing for investment or acquisition. The agreement is also required when existing board members transition from executive to non-executive roles, ensuring their responsibilities and liabilities are properly redefined.
Key legal considerations
The agreement must clearly define the director's duties under sections 131-138 of the Companies Act 1993, including care and diligence obligations and avoiding conflicts of interest. Remuneration structures should be transparent and compliant with company constitution requirements, while confidentiality clauses must balance disclosure obligations with proprietary information protection. Indemnification provisions are crucial for protecting directors from personal liability, though these cannot cover breaches of duty or criminal conduct. The document must also establish clear termination procedures and notice requirements to protect both parties' interests.
Legal requirements in New Zealand
Under New Zealand law, non-executive directors have the same legal duties and potential liabilities as executive directors, making proper documentation essential. The agreement must comply with the Companies Act 1993's director duty provisions and ensure the director meets eligibility requirements under section 151. For listed companies, the Financial Markets Conduct Act 2013 imposes additional disclosure obligations and insider trading restrictions that must be addressed. The Health and Safety at Work Act 2015 also creates due diligence obligations for directors regarding workplace safety, even in non-executive roles. Privacy Act 2020 compliance is necessary when handling personal information, and the agreement should specify data protection responsibilities.
GOVERNING LAW
Applicable law
This Non Executive Director Agreement is drafted to comply with New Zealand law. Key legislation includes:
Financial Markets Conduct Act 2013: Regulates financial markets and governs director responsibilities in listed companies, including disclosure obligations and insider trading provisions.
Contract and Commercial Law Act 2017: Provides the legal framework for contract formation and enforcement in New Zealand, relevant for the agreement's basic terms and conditions.
Health and Safety at Work Act 2015: Outlines director responsibilities and due diligence obligations regarding workplace health and safety matters, even in a non-executive capacity.
Privacy Act 2020: Governs the collection, use, and disclosure of personal information, relevant for director's personal information handling and confidentiality obligations.
Employment Relations Act 2000: Relevant for establishing clear boundaries between executive and non-executive roles, ensuring the agreement doesn't inadvertently create an employment relationship.
Takeovers Act 1993: Relevant for directors of listed companies, governing conduct during takeover situations and director responsibilities.
Financial Markets Authority Act 2011: Establishes the Financial Markets Authority and its oversight powers, relevant for understanding regulatory compliance requirements for directors.
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