The Role of the Board in Corporate Governance

Corporate governance is an established set of rules, procedures and practices that businesses use to run themselves. This governance framework establishes the checks-and-balances to keep businesses accountable to their shareholders, employees and other stakeholders.

The models of corporate governance are diverse in https://dailyboardroom.com/how-to-lead-productive-brainstorming-meetings/ today’s business world and all have distinct effects on the efficiency of a business. Certain governance systems are more focused on the stock exchange, while others focus more on the company’s clients or employees.

The primary responsibility of the board is setting the company’s vision for the long-term and ensuring compliance with ethical and legal standards. The board is also responsible for overseeing management and the CEO. All directors should be involved and prepared for board meetings.

A well-functioning committee structure enables the board to examine and discuss topics in greater depth than may be possible at full-board meetings. The board must decide which committees will carry out what tasks and who will sit on each committee.

The corporate governance structure must be fair to all shareholders. This includes avoiding the use of decisions that favor one shareholder group over another. This also includes treating suppliers, vendors and communities with respect.

The role of the board differs according to the industry and the country. In the United States for example, the Securities and Exchange Commission has created a set of best practices for board members in areas such ESG reporting, cyber security and governance structures. The SEC’s requirements are supplemented with good practice guidance from leading global university centers of excellence in leadership and business management.

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