A board’s role in corporate governance is to ensure that the company is operating legally and in the best interests of shareholders and other stakeholders. This requires the board to operate independently of management and focusing on the company’s most important issues rather than day-to-day operations.
The board is accountable for the management of risk as well as the operation and strategy of a business, as well as other decision-making that is reserved for it. The board also chooses the CEO, supervises and plans the succession of the CEO and the performance of that CEO. It also sets the company’s culture and mission.
It also promotes shareholder interests as well as ensures that financial information is correctly reported, and ensures that investors get all the information that could impact their investment portfolios. It also takes measures to protect the integrity and reputation of a company and stop fraud. It should encourage directors to be educated regularly in particular about the latest technology, important issues such as environmental governance, social, and governance (ESG) or global crises that affect the way that businesses are run.
A well-constructed structure of the committee, with a secretary and a chair is crucial to efficient governance. It’s important to create a culture of open communication and collaboration among all members of the committee. The secretary of the committee sets the agenda, keep minutes of meetings and distribute them to the members of the committee.
A committee must be able to rely on its advisors and their reports, advice, and opinions. It is important that the committee understands the role of these advisors and assesses their qualifications.