A board of Directors plays an important role in the administration and governance of a company. The board is comprised of people with different backgrounds and abilities that are not a part of the management team or the company. This means they operate independently of the daily management tasks of the business offering a fresh view on any strategic issues that might arise.
The primary function of corporate boards is to set the vision, mission and goals of the organization. The majority of the time, this is done in conjunction with the CEO or general manager of the company. The board will also aid the company to achieve its goals by assisting in the formulation of strategic policies and a plan for managing risks. The board can also provide important contacts and networks to the company.
A board’s other essential responsibility is to ensure that the business operates legally and in accordance with the stated mission and purpose. This involves making sure that the board has an in-depth knowledge of the company’s legal organizing documents, including articles of incorporation, bylaws, and applications for tax-exempt status. The board makes sure that the company is in compliance with its legal reporting requirements.
The board is also responsible for the hiring of the CEO, determining his compensation and overseeing management. The board is also accountable for overseeing the financial statements of the company and aiding the chief financial officer to create short-term and long-term business strategies based on SWOT analysis. Additionally, the board is responsible for assessing and evaluating its own performance as well as providing the necessary leadership training to all members.
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