You are on page 1of 13

Introduction:This understanding and appreciation of the role of the boards as being valuable has resulted in several recommendations to boost

their contribution to success of companies by innumerable committees that have been appointed by governments and public spirited organizations all over the world.

company laws enacted by various countries make it a

point to stress that the duty of a statuary board is to protect and represent the interests of shareholders. The board cannot and does not run the company. There are executive who run the day -to day affairs of the company as dictated by the board. The role of the board is to work out business Strategy and address big issues. A boards role is evolved from law, custom, tradition & current practice, while it gets its authority from the Shareholders as their representatives to run the companys mission.

How a strategic board can ensure good governance?


If the board is smaller and compact, the greater will be the

director's involvement.
Strategic board should be divease, i.e, the directors should

have different professional backgrounds, so as to provide their collective wisdom to devise a strategy for their company.

The board cannot be effective unless it is being

provided with appropriate & comprehensive information. As they say, the out put is only as good as the input.
While the CEO.s responsibility is to focus on the day-

to-day operations, the boards is to concentrate on long-term shareholder value

Role of the Board in Corporate Governance


By Erika Johansen, eHow Contributor
A corporate board safeguards the interests of the

corporation's stakeholders.
In the modern company, the board is generally supposed to

manage the corporation on behalf of the shareholders, effectively acting as trustees for shareholder interests. Directors are elected by shareholders, and may even be shareholders or company employees themselves.

Corporate governance directs organizations' decisions. One of the most important roles of corporate governance is

to ensure that strategic decisions are made in the interest of those with a stake in successful outcomes. Boards have increasingly become more focused on corporate shareholders, but a shift may be beginning to occur. The interests of stakeholders, such as customers, potential customers and non-customers impacted by the decisions of a company, may begin to get attention as corporate governance plays an increasingly strategic role.

Functions of Boards
A board's primary functions are to:
nominate directors, elect a chairman and appoint a chief

executive;
set objectives, define policy and develop strategy; interpret corporate culture, ethical standards and people

rationale into everyday acts;


specify authorities of chairman, chief executive and board;

make certain the chief executive provides satisfactory leadership, planning, organization, control and succession;
approve short and medium term tactical, technical,

operational and financial plans;

monitor performance against agreed goals; check that the employees, customers, suppliers and

society get a fair deal from the organization and that a proper balance exists between their interests and those of members;
account to members for the results; ensure present plans and actions provide for the

organization's continuity;
when necessary remove the chairman or the chief

executive or other directors.

1Thinking strategically: Give direction to the business. Review the process & decide on the key resources. Decide about the process of implementation.

2 Supervising management functioning: Review of the fey business out put performance. Monitoring the budgetary control process. Overseeing the performance of the executive.

3 Accountability: To the corporation as a distinct legal

entity/personality.
To the owners of the corporation/business. To the legislators as well as regulators. To the other stakeholders.

4 formulating policy: Defining the purpose & values of the organization. Developing vision for the organization.

Thank you