Corporate governance of the board is the role of a board in advising and supervising a business to ensure that it operates legally and fairly, as well as in the interests of its shareholders and stakeholders. The boards do this by being separate from the day-to-day operations and management of the company. The board makes sure that the company’s strategic plans comply with its legal, ethical and financial obligations. It also decides on the main threats to the company and the processes for managing the risks, while delegating some of these tasks to committees.
Many boards have a chairperson who is responsible for facilitating meetings, maintaining an excellent atmosphere and setting the agenda. Other duties of the chair are to stimulate discussion and debate, and ensuring that important issues are given it impacts on financial transactions adequate attention. Board secretaries also play a crucial role in organizing board meetings and in preparing the agenda.
Additionally boards are becoming more involved in a variety of topics, including risk and strategy management, sustainability, potential mergers and acquisitions as well as development of culture and talent. They are also expected have a strong focus on the ESG (environmental social, societal and governance) aspects that have become essential to investors and consumers alike.
To be effective, a board must have the proper structure and members with different skills, knowledge and expertise. It is crucial that members of the board have a deep knowledge of the industry and sectors within which their businesses operate. This is essential for their ability to work with and challenge management and bring the company’s strategy to keep pace with changing investor and consumer expectations.