Corporate governance of the board is the role of the board in advising and supervising a company to ensure board corporate governance role that it functions legally and ethically, in the interests of its shareholders and stakeholders. Boards accomplish this by operating independently of company management and the day-to-day activities. The board ensures that the company’s strategic plans comply with its legal, ethical and financial obligations. It also determines the biggest risks to the business and the processes to manage these risks, while delegating a portion of these tasks.
Many boards have appoint a chair whose job is to facilitate meetings and maintain an atmosphere of harmony, as well setting the agenda. Other responsibilities for the chair include stimulating discussion and debate, and making sure that important issues receive adequate attention. Board secretaries are also essential in planning board meetings and preparing the agenda.
In addition boards are becoming more involved in a variety of issues, including risk and strategy management, sustainability, mergers and acquisitions, and growth of talent and culture. They are also expected to put a an intense focus on ESG (environmental, social and governance) factors that have become important to both consumers and investors alike.
The effectiveness of a board is determined by its structure as well as the members’ mix of knowledge, abilities and skills. It is important that the members of the board have a thorough understanding of the various industries and sectors within which their companies operate. This is essential to their ability to challenge and assist management in bringing the company’s strategies into alignment with the changing needs of investors and consumer expectations.