Executive vs Non-Executive Directors: Who Does What

The question of executive vs non executive director in Mauritius comes up whenever a company adds a second voice to its board: a founder who runs the business every day, an investor who wants a seat, or an outsider brought in to provide a check on management. The labels describe how a person is involved in the company. They do not describe a different legal status.

The short answer

Under Mauritian company law, a director is a director. The Companies Act 2001 does not create two classes of office called "executive" and "non-executive". Both labels come from practice, from employment arrangements and from governance codes. What changes from one director to the next is the role in the business, the contract with the company, the pay and the degree of independence from management.

In practice:

• An executive director sits on the board and also holds a management role, usually under an employment or service contract.
• A non-executive director sits on the board but does not manage the company day to day. They challenge, advise and supervise.
• An independent director is a non-executive director with no relationship that could cloud their judgement, such as a shareholding link, a family tie or a commercial dependence on the company.

Whether any of this is needed depends on the type of company, its licences and its shareholders. That is a matter for an adviser who knows the facts.

Executive vs non-executive director: side-by-side comparison

The last row matters most. Whatever the label, the person who is appointed and registered as a director carries the office. The detail of what the law asks of every director sits in directors' duties under Mauritian company law and is not repeated here.

What an executive director does

An executive director combines two hats. As a director, they take part in board decisions and share responsibility for them. As an officer or employee, they carry out the decisions: signing contracts, hiring staff, managing the bank relationship, preparing figures for the board.

This double role creates a built-in tension. When the board reviews the performance of management, the executive director is reviewing their own work. That is acceptable in a small company, where the owner is the manager, but it explains why larger or regulated groups add directors who are not part of management.

Points to watch:

• Two documents, not one. The employment or service contract governs the day job. The appointment as director is a separate act. Ending one does not automatically end the other, so the paperwork should say what happens to each.
• Pay needs a proper basis. A salary for management work and a fee for acting as a director are different things. How to structure and document them is covered in how to pay a director properly.
• Conflicts are frequent. An executive who negotiates their own bonus or lends money to the company is in a position where interests collide. See declaring a conflict of interest as a director and loans between a company and its directors.

What a non-executive director does

A non-executive director attends board meetings, reads the board pack, asks questions and votes. They do not manage staff or operate the company's accounts. Their value lies in distance and experience.

Typical contributions:

1. Challenge. Testing the budget, the strategy and the assumptions behind a decision.
2. Oversight. Checking that reporting to the board is accurate and timely, and that compliance work is actually done.
3. Specialist input. Sector knowledge, financial expertise or international contacts the management team lacks.
4. Representation. Protecting the interests of a shareholder or investor group on the board.

A non-executive seat is not a passive one. The person is still a director, so signing papers without reading them is a poor defence if something goes wrong. The practical consequences are discussed in liability of a resident director, which applies by analogy to any director who relies on others.

Frequency of involvement

Because the role is part-time, the practical question is how often the person must be available. That is set by the company's constitution, the appointment letter and the board calendar. The mechanics of convening and holding meetings are in board meetings of a Mauritian company.

What makes a director "independent"

Independence is about judgement, not about a title. A director may be non-executive and still not independent: an investor's nominee, for example, is expected to defend that investor's interests.

Questions commonly asked to test independence:

• Does the person hold shares, or represent a shareholder, in a way that gives them a stake in particular outcomes?
• Are they related to a shareholder or to a member of management?
• Do they, or their firm, earn significant income from the company other than their director fees?
• Have they recently worked for the company or its auditor?
• Could losing the appointment create a financial problem for them?

An honest "yes" to any of these does not prohibit the appointment. It means the person should not be presented as independent without explanation.

Mauritian rules refer to independence of mind in specific settings. For a Global Business Company (GBC), the FSC looks, among other things, at whether the company has at all times at least 2 directors resident in Mauritius who are of sufficient calibre to exercise independence of mind and judgement. The words "at all times" were added by the Act 18 of 2025, in force on 9 August 2025. This is a test about management and control from Mauritius, and the choice of resident directors is dealt with in resident director requirements in Mauritius. It is a different question from whether a director is independent of the shareholders in a governance sense.

Remuneration compared

Pay is where the executive and non-executive roles differ most visibly, and where mistakes are most common.

Two cautions apply. First, a fee that depends heavily on profits can weaken the independence it is meant to buy. Second, the tax and payroll treatment of a payment depends on how it is characterised, so it should be settled before the first payment rather than corrected afterwards. The payroll side is covered in payroll in Mauritius.

Which type does your company need?

Mauritian law does not require a company to choose between executive and non-executive directors. It sets minimums on numbers and residence, which vary by company type. According to the official CBRD page on domestic incorporation:

• a domestic company needs at least 1 resident director and 1 shareholder;
• Global Business and VCC structures need 2 resident directors;
• an Authorised Company needs 1 director, who is not necessarily resident, and must have a registered agent.

A one person company is a private company whose sole shareholder is also its sole director (unless the sole shareholder is a company). In that case the single director is necessarily executive in practice, and the question of non-executive oversight does not arise unless the owner decides to add a board member. The compliance routine for such a company is described in compliance for a small private company with one director.

Changes to the board

Appointing, replacing or removing any director triggers a filing. Any change of director or secretary (appointment, resignation) or of their details must be notified to the Registrar within 28 days. If this is missed, each director and the secretary commits an offence liable to a fine of up to Rs 200 000 (Companies Act, s. 142). The rule applies equally to executive, non-executive and independent directors, so a mid-year board change should be filed at once.

A person must also be eligible. Disqualification rules and the suitability test applied to some regulated companies are explained in can a director be disqualified and the fit and proper test for directors.

Practical checklist for adding a non-executive director

• Decide what the board lacks: oversight, expertise, or independence
• Confirm whether the company's constitution limits the number of directors
• Check eligibility and any disqualification issue
• Agree a written appointment letter covering role, time commitment and fees
• Set the fee basis before the first payment
• Record any conflicts of interest in advance
• File the change with the Registrar within the statutory deadline
• Consider directors and officers insurance for the new appointee
• Update internal registers and the beneficial ownership records if the change affects them

Common mistakes

• Calling a nominee "independent". A director who answers to one shareholder is not independent of that shareholder.
• Treating a non-executive seat as honorary. The office carries the same standing as any other directorship.
• Mixing salary and fees without documents. This invites questions from the tax authority and from co-shareholders.
• Forgetting the filing. A change that exists only in the minutes is not on the public record.
• Assuming that a resident director is the same as an independent director. The two concepts answer different questions.

If you are unsure how to structure the board for a specific company, you can send a request through the site's form and a licensed provider will review your situation.