Board of Directors Governance

To manage a business, you need more than just workforce. You need a combination of processes, rules, people, and procedures, in other to make it work efficiently. This is where corporate governance begins. Corporate governance deals with how a board assists, directs and manages the corporation by acknowledging the impact of decisions on customers, employees, suppliers, shareholders, and the community.

The board of director’s job is to oversee the conduct of the business and also to supervise management. The board of directors in some capacities are allowed to delegate certain powers to the corporate officers (CFO or CEO) and also to delegate responsibilities to the executives on how to best carry out the company’s day to day affairs.

The board of directors form the basis for corporations to make decisions that takes into account the economy, society, regulatory boards and the market environment. In fact, they could act as Economic damages expert to take smart decisions accordingly.

The board of directors have members of the committee, which will be subsets of the board of directors and which will report back to the board of directors. These are such committees as audit and compensation.

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Who Makes Up The Board?

Normally, and except in rare occasions, the board of directors is made up of active investors of the corporation. For one, the major investor is entitled to a seat, the CEO of the company is also required to have a seat as well, while the rest depends on their contribution to the growth of the company as well as their market sense/sales knowledge of the product and the market.

At the initial stage, the board of directors’ members are usually not more than 7 and not less than 5 members, but as time goes on, the size of the board of directors would increase in proportion to the growth of the company, the needs of the company, and the normal practices for the industry.

Each seat of the Board of Directors has a vote that is to be used in voting for important decision making processes. To avoid a draw or a stalemate during decision making, it is best if you have a board of directors of an odd number.
To have a good board of directors that would help govern the company, there are 5 basic profiles of qualities you need. They include the following;

  • The “Mature” members: These members are basically those that can calm the board down by offering maturity and experience to mediate and arrive at the proper decisions for tough problems. They have a calming influence on the board.
  • The “Customer” members: These members are those that understand the customers. They are familiar with the market, the trends, and the needs of the customers. They may not necessarily need to be customers as long as they understand the customers.
  • The “Genius” members: These members do not only understand the business, they also under the developmental efforts that is required to pierce through the market and fulfill your needs. Also, they usually have the expertise to use 409a valuation calculator to significantly find the worth of the business at every single step.
  • The “Connection” members: These members are all about the connections. They are ready and have a wide network of contacts that are on offer. They are also willing to let the board use it to further the company.
  • The “Ethical” members: These members are there to call you out when they smell something fishy. They make sure that everything is done completely ethical and legal without compromising anything.

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Functions of the board of directors

The board of directors act as the governing body of the company in terms of decisions making. They are there to provide guidance and direction for the future. Eventually, they would be acting like an in-house Damage calculation expert witness and assess the following risks:

  • Reputation of the company
  • Litigation
  • Finances
  • Technology
  • Reporting
  • Safety
  • Health
  • Ethics, and
  • Environmental.

The following are some of their functions:

1.They protect the interest of the board, the management, the stakeholders, and the shareholders, by responding to their responsibilities and duties with the highest regard to accountability and transparency.

2.These make decisions after serious consideration to their effects and consequences on the customers, employees, suppliers, shareholders, and communities. Thus, 409a valuation calculator could be used as an efficient helping tool.

3.They oversee and plan, while at the same time desist from micromanaging the company. This means that they have to delegate certain powers under certain circumstances to the CFO or CEO.

4.They delegate some certain duties to board committees, who will devote time, resources, and energy to resolve issues.

A wellcomposed board of director’s governance, is one that offers a wide range of perspectives, expertise and knowledge into the boardroom, as well as into the market.

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