The role of a board in corporate governance is to ensure that the organization operates legally and in the best interest of shareholders and other stakeholders. This is why the board operate independently of management, and focus on issues of importance instead of routine business.
The board is responsible for the management of risk as well as the operation and strategy of a business, as well as other decisions that are made by it. The board also chooses as well as oversees and plans the succession of the CEO, as well as the performance of the CEO. It also sets the company’s values and culture.
It also protects the interests of shareholders, ensures that financial information is reported correctly and makes certain that investors are informed of all information that could affect their investments. It also takes steps to protect the integrity and reputation of a company and avoid fraud. It should encourage directors to be informed regularly particularly on the latest technologies, important issues such as environmental social, governance, and (ESG) or global crises that affect the way in which businesses are managed.
A well-formed committee structure, with secretary and chair, plays a critical role in the effective management. It is crucial to create an environment of open communications and collaboration between all members of the committee. The secretary of the committee can help determine the agenda, as well as take minutes of meetings and distribute them to all members of the committee.
A committee should have the confidence to trust its advisors’ advice, reports, and opinions. It is essential that the committee comprehends who these advisors are and evaluates their qualifications.
