A board plays a crucial role in corporate governance to ensure that the company is operating legally and in the best interests of shareholders and other stakeholders. This is why the board function independently of management and concentrate on the most important issues, not routine business.
The board is responsible for the management of risk and the strategy and operation of a company, as well as other decisions that are reserved for it. It also selects and oversees the performance of the CEO and the CEO succession planning process, and it establishes the company’s mission and culture.
It also promotes shareholder interests, ensures that financial information is appropriately reported, and ensures that investors get all the information that may affect their investment portfolios. It also takes steps to safeguard the integrity of a company and to prevent fraud and other deceit. It should encourage ongoing training of directors, specifically on new it impacts on financial transactions technologies, crucial issues such as environmental governance, social and (ESG), and global crises that affect how businesses operate.
A well-constructed structure of the committee, including chairs and secretary, is critical to effective governance. It’s important to create an atmosphere of open communication and collaboration among 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 should be able to trust the reports, advice and opinions of its advisers. It is vital that the committee knows who these advisors are and evaluates their expertise.