A board of directors has a vital role in corporate governance to ensure that an organization is legally run and in the best interest of shareholders and other stakeholders. This is why the board function independently of management, and focuses on the most important issues, not routine business.
The board is accountable for the management of risk, the operation and strategy of a firm, and other decisions that are entrusted to it. The board also selects, 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 promotes shareholder interests and ensures that financial information is properly reported, and makes sure that investors are provided with all the information that could impact their investment portfolios. It also takes steps to protect the integrity of a company and stop fraud and deceit. It should encourage ongoing training among directors, especially regarding new technologies, critical issues like environmental Governance, Social and Governance (ESG) and global crises that affect how a business is conducted.
A well-constructed committee structure, including the secretary and chair, plays a critical role in ensuring effective governance. It is crucial to create an environment of open communication and collaboration between all members of the committee. The committee secretary will help to set the agenda, and keep minutes of meetings and distribute them to all members of the committee.
A committee must be able to trust the reports, advice and opinions of its advisors. It is vital that the committee knows the role of these advisors and evaluates their expertise.
