The board of directors is chosen to act on the behalf of the company’s shareholders in order to manage the daily affairs of the business. Overall, the board is held responsible regarding the shareholders and holds a yearly meeting each year whereby the directors have to give a report to them concerning the company’s performance, along with its future strategies and plans and to also present themselves for possible re-election.The main purpose of the board of directors is to make sure the company thrives by cooperatively directing the affairs of the company, while meeting the proper interests of its stakeholders and shareholders. In addition to both financial and business issues, the board has to deal with issues and challenges that relate to corporate governance, corporate ethics, and corporate social responsibility.
The various roles of the board and what they include:
1. The board establishes values, mission, and vision for the company.
• Establish company policies
• Establish and review the goals of the company
• Determine the mission and vision of the company in order to set the pace and guide its future development and existing operations
• Establish the values that are necessary to enhance the company
2. The board delegates to management.
• Openly communicate with members of senior management
• Assign authority to management as well evaluate and monitor the implementation of key strategies, policies, and business plans
• Make certain the internal controls are successful
• Establish monitoring criteria that’s intended to be utilised by the board
3. The board establishes structure and strategy.
• Figure out strategic options, choose which ones to pursue, and determine the exact means in which to incorporate and support them.
• Make sure both the organisational capability and structure of the company are suitable for employing the selected strategies.
• Establish the business plans and strategies that support the corporate strategy.
• Review and assess existing and potential opportunities, risks, and threats concerning the external environment and future and current strengths, risks, and weaknesses relative to the corporation.
What are the responsibilities of the directors?
It’s the job of the directors to watch over the general affairs of the organisation, and therefore must be completely trusted. In the past, some abuse their job and seek to gain profit at the expense of the corporation and also at the expense of the company’s shareholders as well.
As a result, the law enforces a variety of responsibilities, burdens, and duties in order to diminish the chance of abuse. Most of company law is viewed as a certain balance between enabling directors to effectively manage the business of the company in order to turn a profit and to prevent them from abusing this privilege.
What is the role of a non-executive director?
From a legal standpoint, there’s no actual difference between a non-executive and executive director. However, there’s an inescapable sense that the role of the non-executive often balances the role of the executive director, and therefore makes the board function as a whole. While the executive director has a more personal knowledge of the organisation, the non-executive director is sometimes expected to have a much broader point of view in general.
Let me ask you a question: Do you think the board will benefit if the non-executive director shares many of the same responsibilities as an executive director during the board meeting?