Board of Directors
A board of directors is a group or body of individuals elected or appointed to act as representatives of the company or organization. This body is responsible to establish corporate management related policies and to make decisions on major company issues. Commonly it is also known as board of trustees, board of governors, board of managers, or executive board. It is often simply referred to as "the board.
A board's activities are determined by the powers, duties, and responsibilities delegated to it or conferred on it by an authority outside itself. The board is elected by the stockholders and is the highest authority in the management of the corporation.
The legal responsibilities of boards and board members vary with the nature of the organization, and with the jurisdiction within which it operates. For public corporations, these responsibilities are typically much more rigorous and complex than for those of other types.
Role of the Board
A strong and effective board should have a clear view of its role in liaison to management. The board’s duty is to focus on guidance and strategic oversight, while it is management’s duty to run the company’s business, with the object of maximizing shareholder’s wealth. CEOs and management need to work with the board to establish the right kind of processes and communications to ensure that the company is running effectively and in accordance with the board’s basic fiduciary oversight requirements.
The ultimate responsibility for directing the company, however, lies with the board, since most state corporations statutes generally provide that the business of the company shall be managed under the direction of the board. The specifics of the board’s role will vary with size, stage and strategy of the company.
Major Duties of Board of Directors
Directors of every corporation and members of LLC are bound to perform legitimate task while working for or on behalf of the corporation or LLC. By Law, every director is supposed to pay his attention to company’s matters and try to increase the productivity and efficiency of the company.
Every state’s Law restricts directors of a corporation while dealing on behalf of the company as they represent the company and shareholders. A single good decision will definitely impact the company’s overall position and ultimately shareholders will gain some benefit.
By virtue of deeds directors and members are likely to perform the following task and duties with honesty and dedication
- Fiduciary responsibility - Corporate board members have a fiduciary responsibility to care for the finances and legal requirements of the corporation. They must act in good faith and with a reasonable degree of care, and they must not have any conflicts of interest. That is, the interests of the company must take precedence over personal interests of individual board members.
- Mission and Vision - Board members are responsible for setting the mission of the company and assuring that all actions are related to and adhere to that mission. The board can change the mission, but only after careful deliberation.Provide continuity for the organization by setting up a corporation or legal existence, and to represent the organization's point of view through interpretation of its products and services, and advocacy for them.
- Omission - Corporate boards of directors do not participate in day-to-day decision-making; instead, they set overall policy, based on the corporate mission and vision, and they exercise an oversight function, reviewing the actions of corporate officers and executives.
- Manage the organization by broad policies and objectives, formulated and agreed upon by the chief executive and employees, including to assign priorities and ensure the organization's capacity to carry out programs by continually reviewing its work
- Annual Meeting - At the annual meeting of the corporation, the board announces the annual dividend, oversees election of corporate board members, elects or appoints officers and key executives, and amends the laws, if necessary.
