A board plays a crucial function of corporate governance that is to ensure that a company is legally run and in the best interests of shareholders and other stakeholders. This requires the board to operate independently of management and focussing on the company’s key concerns rather than its day-today operations.
The board is responsible for the management of risk, the operation and strategy of a company, and other decisions that are entrusted to it. The board also chooses and oversees the succession of the CEO as well as the performance of the CEO. It also establishes the company’s mission and culture.
It also promotes the interests of shareholders, ensures that financial data is correctly reported and ensures that investors receive all relevant information that could impact their holdings. It also takes measures to protect the integrity and reputation of a business and prevent fraud. It should encourage directors to be educated on a regular basis, especially about emerging technologies and important issues like environmental social, governance, and (ESG) or global crises that impact the way in which businesses are operated.
A well-constructed committee structure, which includes the secretary and chair plays a crucial role in effective governance. It is essential to create an atmosphere of collaboration and open communication among all members of the committee. The secretary of the committee will establish the agenda, keep minutes of meetings, and distribute them to the members of the committee.
A committee must be able to rely internal corporate processes on the reports, advice and opinions of its advisers. It is important that the committee understand who these advisers are and to evaluate their qualifications.