Three Core Obligations of a Board of Directors and Stakeholders
A board of directors is independent from the management of a company and supervises and advises a company. They also make decisions to assist it to grow. It ensures that the company is operating in compliance with the laws and in the best interests of investors, employees and other stakeholders. The board members should have an array of expertise and skills and should strive to create a culture which is open and trustworthy.
The structure, size, and members vary according to the type of business entity, whether publicly traded (a public company), not publicly traded (private or limited), owned by employees or family members (family or employee-owned) or tax-exempt (a charity or a nonprofit). Each board’s governance is governed by its own set of rules, which can be set out in its articles of incorporation, or other bylaws.
The primary responsibility of the board is to meet three essential obligations:
A well-rounded board includes members with a range of experiences and backgrounds. They are experts in their field, but also generalists who are able to look at things from a helicopter’s point of view. They are not afraid to ask tough questions and challenge the assumptions of management. The best boards also promote diversity and encourage collaboration as well as communication and trust.
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