Board corporate governance is the function of a board of directors in advising and supervising a company to ensure that the company operates legally and in the fair interests of its shareholders it impacts on financial transactions and stakeholders. Boards perform this function by operating independently of the management of the company as well as daily operations. The board ensures that the company’s strategic plans align with its legal, financial and ethical obligations. It also determines the biggest risks that the company faces and the procedures for managing them, delegating some of these tasks.
A majority of boards appoint a board chair, who’s job is to facilitate meetings and maintain good dynamic, as well setting the agenda. Other responsibilities of the chair include generating discussions and debate, as well as making sure that important issues get appropriate attention. Board secretaries also play a crucial role in scheduling board meetings and creating the agenda.
Additionally boards are becoming more involved in a variety of areas, including risk and strategy management, sustainability, mergers and acquisitions and the development of talent and culture. They are also expected to put an intense focus on ESG (environmental social and governance) issues that have become crucial for both consumers and investors alike.
The effectiveness of a board depends on its structure and the members’ mix of knowledge, skills, and experience. This means that they have a thorough understanding of the industry in which the companies they represent and how they operate. This is important for their ability to assist and challenge management and bring the strategy of the company in line with changing investor and consumer expectations.