Corporate governance of the board is the function of a board of directors in advising and supervising a company to ensure that it functions legally and ethically, in the best interests of its shareholders and stakeholders. Boards perform this function by operating independently of company management and the day-to-day activities. The board ensures the company’s strategy plans are aligned with its financial obligations, legal obligations and ethical obligations. It also determines the major threats to the business, as well as the procedures for managing them, delegating some of these tasks.
Most boards have a chairperson who is responsible for facilitating meetings, ensuring an appropriate atmosphere and setting the agenda. Other responsibilities of the chair include encouraging discussion and debate, and ensuring that important issues receive proper attention. Board secretaries also play a crucial role in scheduling board meetings and preparing the agenda.
Additionally, boards are becoming increasingly involved in a range of areas, including risk and strategy management, sustainability, potential mergers and acquisitions, as well as development of culture and talent. They are also expected to have keen attention to ESG (environmental, social and governance) aspects that are becoming essential to investors and consumers alike.
The effectiveness of a board’s work is dependent on its structure and its members’ mix of knowledge abilities and skills. It is essential that members of the board have a thorough knowledge of the industries and the sectors in which their businesses operate. This is crucial to their ability to work with and challenge management and bring the strategy of the company in line with changing investor and consumer expectations.
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