A board of directors (also known as a “board” or “BoD”) is an elected group of individuals by shareholders of a company to represent their interests. Board members establish policies for the overall oversight and management, as well as protecting shareholder assets. The board is a liaison between the shareholders of the company and the company and ensures that the company is operating in a legal and responsible way.
This includes setting the tone for the entire organization from the top by establishing foundational rules of ethical conduct. It approves corporate policies that are designed to create long-term value. It also selects the chief executive officer, and oversees the CEO and upper management in running the company’s operations, including the allocation of capital for growth as well as assessing and managing risks.
The board also scrutinizes financial reports and ensures compliance with the laws and regulations. It also communicates with all stakeholders, such as employees suppliers, customers and employees, and the local community, in order to understand their concerns.
It is crucial that a company’s boards have both inside and outside members, who are a mix of gender and ethnicity as well as age. In fact, companies that have more diversity on their boards tend to perform better financially than those that do not. This is because an inclusive board is more likely to have http://www.netboardroom.com/responsibilities-of-boards-of-directors a range of perspectives and opinions, leading to better decisions.