A board plays a crucial role in corporate governance to ensure that an organization is operating legally and in the best interests of shareholders and other stakeholders. This is why the board operate independently of management, and concentrate on major issues instead of daily business.
The board is accountable for the management of risk as well as the operation and strategy of a company, and other decision-making that is reserved for it. The board also chooses, oversees and plans the succession of the CEO as well as the performance of that CEO. It also establishes the company’s values and culture.
It also promotes shareholder interest as well as ensures that financial information is correctly reported, and ensures that investors get all the information that could affect their holdings. It also takes steps to safeguard the integrity of a business and prevent fraud and other deception. It should encourage ongoing training among directors, especially on emerging technologies, key issues such as environmental governance, social and governance (ESG), and global crises that impact how a business is conducted.
A well-formed committee structure, which includes a chair and secretary, plays a critical role in the effective management. It is crucial to create an environment of open communication and collaboration between all members of the committee. The secretary of the committee will assist determine the agenda, as well as record minutes of meetings, and distribute them to all members of the committee.
A committee must be able to rely on its advisors’ advice, reports, and opinions. It is vital that the committee is aware of the role of these advisors and evaluates their expertise.
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