Should the roles of Chair and CEO be split?

Whether one person should hold both the Chair and Chief Executive Officer (CEO) roles is a perennial governance debate. Some UK companies, particularly smaller or founder-led ones, have combined the two positions for efficiency and control. Yet as expectations around transparency and accountability rise, many boards rethink this structure. Separating the roles is viewed not just as good governance, but as a sign of maturity and professionalism which enhances stakeholder confidence.

At its core, the issue concerns balance. The CEO leads the business and executes strategy, while the Chair oversees the board, ensuring it holds management to account. When both roles sit with one person, the lines between oversight and execution blur. For companies facing scrutiny from shareholders, regulators, or the public, that can create risk.

The UK Corporate Governance Code in practice

The UK Corporate Governance Code, which applies to listed companies on a “comply or explain” basis, sets out clear expectations: the roles of Chair and CEO should not be combined. The Code emphasises the importance of a distinct division of responsibilities to prevent any single individual from having unfettered decision-making power.

Although private companies are not legally bound by the Code, many use it as a benchmark for best practice. For boards seeking to enhance credibility with investors, lenders, or business partners, alignment with these standards can carry real reputational value. It signals a commitment to checks and balances rather than concentration of authority.

Investor expectations and market pressure

Institutional investors have become vocal about governance structure, often viewing combined Chair–CEO roles as a warning sign. Proxy advisors, pension funds, and activist shareholders increasingly factor governance quality into their voting and investment decisions.

Companies that retain dual roles may find themselves under growing pressure during annual general meetings or shareholder engagement processes. Some investors even link executive pay approval to progress on governance reforms. The message from the market is clear: separation builds trust.

For listed companies, this expectation is particularly strong. A structure that merges leadership and oversight can invite questions about board independence – questions that may distract from performance and strategy.

Is a combined role more efficient?

Still, not all boards agree that splitting the roles is the only path to effectiveness. Some executives argue that combining them provides clear direction, unity of vision, and quicker decision-making, particularly in periods of transformation or crisis.

For founder-led or fast-growing businesses, the combined role can help maintain momentum and entrepreneurial drive. Supporters also note that governance risks can be mitigated through strong independent non-executive directors and transparent reporting structures.

In this view, efficiency sometimes outweighs optics. However, this approach works best when stakeholders understand and accept the rationale – usually when performance renders other concerns secondary and, ideally, when other safeguards are firmly in place.

Restructuring for stronger governance

For companies considering change, governance restructuring should be carefully planned. Appointing a separate Chair or CEO often requires amending articles of association, board terms of reference, and succession planning processes. The transition can also have cultural implications, as leadership dynamics shift and reporting lines evolve.

Splitting the Chair and CEO roles reflects a pragmatic recognition that effective oversight and strategic leadership require distinct perspectives. While some companies continue to find value in a combined structure, independence and accountability are becomingly increasingly important in UK corporate governance.

For boards considering this change, careful planning and professional advice can turn a governance challenge into a strategic advantage. Specialist legal advice can help ensure the transition delivers both compliance and confidence.

If you have questions or concerns about the roles of CEO and Chair, please contact Jaan Larner.