What is a Board of Directors?
A board of directors is a group of people who, as elected representatives of the shareholders, are responsible for the overall management and direction of a company. They are responsible for setting the company’s strategic direction, approving corporate goals, and ensuring that the company is managed to achieve these goals.
Understanding the Board of Directors
The board of directors provides guidance to the management team and ensures that the company is operating in the best interests of the shareholders. They are responsible for the governance of an organization. They provide oversight and make decisions on behalf of the shareholders.
The board is made up of individuals who the shareholder elects to represent the interests of the shareholders. The board is responsible for selecting the CEO, setting the organization’s strategy, and approving major corporate decisions such as mergers and acquisitions, acquiring or selling assets, issuing new equity, or declaring dividends. Also, appointing and supervising the CEO, overseeing the company’s management, and approving the budget. In addition, the board of directors has a fiduciary responsibility to the shareholders.
Types of Board of Directors
There are three types of board of directors:
- Executive boards: are made up of the company’s senior management team and are responsible for the day-to-day operations of the company.
- Non-executive boards: individuals who are not employed by the company but have expertise that can be valuable to the company.
In conclusion, the board of directors is responsible for the corporation’s management. In many instances, the board of directors is in a position to ensure that the shareholder’s interests are well represented in the company’s management. The board of directors also has legal and fiduciary responsibilities to ensure that the corporation’s affairs are managed under the charter and by-laws of the corporation.