The role of a board in corporate governance is to ensure that the organization operates legally and in the best interest of shareholders and other stakeholders. This requires the board to operate independently of management and focussing on the company’s key issues rather than the day-today operations.
The board is accountable for the management of risk and the strategy and operation of a firm, and other decisions that are made by it. It also selects and oversees the performance of the CEO, as well as the CEO succession planning process and also establishes the company’s mission and culture.
It also promotes shareholder interest, ensures that financial information is appropriately reported, and ensures that investors receive all the information that could affect their holdings. It also takes steps to protect the integrity of a business and prevent fraud and other frauds. Directors should be encouraged to be trained on a regular basis, especially about emerging technologies and other important issues, such as environmental social, governance, and (ESG) or global crises that impact the way in which businesses are managed.
A well-structured structure for the committee, including a secretary and a chair, is critical to effective governance. It is important to foster a culture of collaboration and open communication between all committee members. The secretary of the committee can help set the agenda, record minutes of meetings, and distribute them to all members of the committee.
A committee should be able to trust its advisors their advice, reports, and opinions. It is important for the committee to be aware who these advisers are and to assess their qualifications.