AICD CDC / GAICD key terms

The legal obligation on each director to apply the degree of care and skill a reasonable person would exercise in the same position, including staying informed and questioning management.

A director must act honestly and in the interests of the company as a whole, not for personal gain or a particular shareholder faction.

Directors must disclose and manage personal, financial, or other interests that could improperly influence their decisions, and step aside where required.

A statutory protection shielding directors from liability for a business decision made in good faith, with proper information, no material personal interest, and a rational belief it served the company.

Directors must stop a company incurring debts when there are reasonable grounds to suspect it is or will become unable to pay them.

A director's freedom from relationships, employment, or interests that could materially interfere with objective judgment, assessed against defined board criteria.

A non-executive director the board judges free of material ties to management, major shareholders, or advisers that could compromise objectivity.

A board member who is not part of executive management, bringing external perspective and oversight rather than operational responsibility.

A director who also holds a management role in the organisation, combining board duties with operational accountability.

The director who leads the board, sets its agenda and tone, and manages the relationship with the CEO while remaining non-executive where practicable.

A formal document setting out the board's role, responsibilities, composition, and the division of authority between board and management.

The formal assignment of decision-making power from the board to committees, the CEO, or management, with defined limits and reporting back.

A subset of directors tasked by the board with focused oversight, such as audit, risk, remuneration, or nomination, reporting recommendations to the full board.

A board committee, ideally independent and chaired by a financially literate director, overseeing financial reporting, external and internal audit, and control integrity.

A board committee setting executive pay and incentives, ensuring alignment with strategy, performance, and stakeholder expectations.

The structured plan of matters for a board meeting, prioritising strategic and risk issues over routine reporting and allocating time accordingly.

The briefing materials distributed before a meeting so directors can prepare, ask informed questions, and make quality decisions.

The formal record of board deliberations and resolutions, evidencing that directors discharged their duties and providing an accountability trail.

A periodic structured review of the board's, committees', and individual directors' performance and effectiveness, often externally facilitated.

A tool mapping the capabilities, experience, and diversity present on the board against those needed to oversee the organisation's strategy.

The planned process of refreshing board composition through recruitment, tenure limits, and succession so the board stays fit for purpose.

The organisation's chosen long-term direction and priorities, defining where it will compete or operate and how it will create sustainable value.

A documented set of goals, initiatives, and measures translating the organisation's strategy into an executable roadmap with timeframes and accountability.

The amount and type of risk an organisation is willing to accept in pursuing its objectives, expressed in statements or limits guiding decisions.

The specific, measurable level of variation from risk appetite that the organisation will accept for a particular risk category or activity.

The policies, processes, and responsibilities by which risks are identified, assessed, treated, monitored, and reported across the organisation.

A structured record listing identified risks, their likelihood and impact ratings, owners, controls, and treatment actions.

The systems, policies, and procedures designed to safeguard assets, ensure reliable reporting, and support compliance with laws and regulations.

The assessment that an organisation can pay its debts as they fall due and will continue operating for the foreseeable future.

An independent examination of financial statements giving reasonable assurance they are free of material misstatement and comply with reporting standards.

A quantifiable measure selected to track progress toward a strategic objective and inform board oversight.

A performance framework measuring financial, customer, internal process, and learning perspectives to give a rounded view of organisational performance.

The pay, incentives, and benefits provided to senior executives, structured to attract talent and align behaviour with long-term shareholder interests.

A shareholder vote, often advisory, on the organisation's remuneration report or policy, expressing approval or concern about executive pay.

The systematic process of identifying, communicating with, and responding to parties affected by or affecting the organisation.

The principle that information is material if its omission or misstatement could influence stakeholder decisions or the organisation's value.

Legal and organisational safeguards shielding people who report suspected misconduct from retaliation, encouraging early disclosure of problems.

A documented set of behavioural expectations for directors, employees, and contractors, guiding ethical decisions and supporting a healthy culture.

The signals leaders send through their own behaviour and decisions about what conduct is genuinely valued, shaping organisational culture.

The shared norms, values, and incentives within an organisation that determine how people actually behave when facing ethical trade-offs.

Disclosure of environmental, social, and governance performance, increasingly subject to mandatory standards, enabling stakeholders to assess non-financial impacts.

A transaction between the organisation and a director, officer, or their associates, requiring disclosure and often independent approval.

The board's process for ensuring continuity of the CEO and critical senior roles, reducing disruption risk from unexpected departures.

The board's structured assessment of the chief executive's performance against agreed objectives, informing pay and development decisions.