Association of Chartered Certified Accountants (ACCA) Certification Practice Test

What does 'NED' stand for in corporate governance?

1. Non-executive director

2. New executive director

3. Non-disclosure executive

4. Networked executive director

The correct answer is: Non-executive director

In the context of corporate governance, the term 'NED' stands for Non-Executive Director. This role is crucial as Non-Executive Directors provide independent oversight and contribute to the decision-making processes of the board without being part of the company's executive management team. They offer a level of objectivity that can help balance the interests of shareholders, ensuring that the management is held accountable while also having the expertise to provide valuable insights and guidance. Non-Executive Directors typically do not engage in the day-to-day operations of the company but are expected to devote sufficient time to prepare for and attend board meetings. Their presence on the board can enhance corporate governance by promoting accountability and transparency and reducing the risk of conflicts of interest. Other options presented do not reflect established terminology within corporate governance. New executive director suggests a different role focused on internal management rather than oversight. Non-disclosure executive implies a focus on confidentiality rather than governance responsibilities. Networked executive director does not correspond to an recognized term within the context of corporate governance.