A board’s role in corporate governance is to ensure that the company is legally governed and operates in the best interests of shareholders and other stakeholders. This role involves operating independently of management and paying attention to the company’s biggest issues, not just the day-to-day activities.
The board is responsible for the management of risk, the operation and strategy of a company, as well as other decision-making that is reserved for it. It also chooses and supervises the performance of the CEO, as well as the succession planning process for the CEO and sets the company’s culture and purpose.
It also promotes shareholder interests It also ensures that financial information is appropriately reported, and ensures that investors receive all the information they need to make informed decisions about their holdings. It also takes steps to safeguard the integrity of a business and stop fraud and frauds. It is essential to encourage continuous education among directors, particularly on emerging technologies, key issues such as environmental, social and governance (ESG), and global crises that impact how a business is conducted.
A well-formed structure of the committee, with the chair and secretary, is critical to effective governance. It’s important to create an environment of open communications and collaboration among all members of the committee. The secretary of the committee will create the agenda, record minutes of meetings, and distribute them to the members of the committee.
A committee must have the confidence to rely on its advisors for advice, reports and opinions. It is vital that the committee knows the role of these advisors and evaluates their expertise.