The role of a board in corporate governance is to ensure that the organization is operating legally and in the best interest of shareholders and other stakeholders. This role requires that the board be independent of management and concentrate on important issues rather than daily business.
The board is accountable for the management of risk and the strategy and operation of a firm, and other decisions that are reserved for it. The board also selects, 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 accurately reported, and makes sure that investors receive all information that could impact their investment portfolios. It also takes steps to safeguard the integrity and reputation of a company and avoid fraud. Directors should be urged to be informed on a regular basis particularly on the latest technologies and important issues like environmental social, governance, and (ESG), or global crises which affect the way in which businesses are operated.
A well-organized committee structure, which includes secretary and chair, plays a critical role in ensuring effective governance. It’s important to create a culture of open communication and collaboration between all members of the committee. The secretary of the committee will create the agenda, keep minutes of meetings, and distribute them to the members of the committee.
A committee should be able to trust the reports, advice and opinions of its advisers. It is crucial that the committee understands who these advisors are and evaluates their expertise.
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