Corporate governance of the board is the function of a board of directors in advising and overseeing a company to ensure that it functions legally, fairly and in the best interests of its shareholders and stakeholders. Boards perform this function by operating independently of the management of the company as well as daily operations. The board makes sure that the company’s plans for strategic planning align with its legal ethical and financial obligations. It also determines the biggest threats to the business, as well as the procedures to deal with these risks, while delegating a portion of these tasks.
Many boards appoint a board chair, whose task is to facilitate meetings and maintain the atmosphere, as well setting the agenda. Other duties of the chair include encouraging discussion and debate, and making sure that important issues receive adequate attention. Board secretaries are also crucial in planning board meetings and preparing the agenda.
Boards are also becoming more involved in issues such as sustainability, mergers and acquisitions, growth of talent and culture and strategies and risk management. They should also put an intense focus on ESG (environmental social and governance) issues that are becoming essential for consumers and investors alike.
The effectiveness of a board depends on its structure and its members’ mix of knowledge skills and expertise. It is crucial that members of the board have a thorough knowledge of the industry and sectors in which the businesses operate. This is essential to their ability to challenge and assist management in bringing the company’s policies in line with changing consumer and investor expectations.