The Role of a Board of Directors in Corporate Management
A board of directors, also known as “BoD” or a “board” is a group of people chosen by shareholders to represent the interests of that company. The board members develop guidelines for the overall oversight of the company and management, while protecting the assets of shareholders. The board is a liaison between the shareholders of the company and the company making sure that the business is run in a responsible and legal way.
This entails establishing fundamental rules for ethical conduct and setting the tone at the top for the entire company. It also approves the corporate plan of action that aims to build long-term sustainable value, selects and supervises a CEO as well as high-level management to manage the company’s businesses, including the allocation of capital and managing risks.
The board also reviews the financial reports and ensures that they are in compliance with regulations and laws. It also communicates with all stakeholders, like employees, customers and suppliers, as well as the local community, to be aware of their concerns.
It is essential for a company’s board to have both inside and outside members, who are the right mix of gender and ethnicity as well as ages. Companies with a higher diversity of board members typically perform better financially. This is because boards with a diversity of members are more likely to have a variety of perspectives and opinions that can result in better decisions.
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