A board of directors, also known as “BoD” or a “board” is a group of people elected by shareholders to represent the interests of that company. Board members create guidelines for the management and oversight of a business, while safeguarding the assets of shareholders. The board serves as a link between the company and its shareholders and is responsible for ensuring that the company operates legally and in a responsible manner.
This includes establishing the foundational rules for ethical conduct and setting the tone at the top of the entire company. It approves corporate plans that aim to create long-term value. It also selects the chief executive officer, and oversees the CEO and upper management in operating the business of the company, such as the allocation of capital for growth as well as assessing and managing risks.
The board also reviews financial reports and ensures that they are in compliance with the laws and regulations. It also communicates with all stakeholders, like employees suppliers, customers and employees, and the local community, to view be aware of their concerns.
The company’s board should include a mix of inside and outside members, with a mix of age, gender, and ethnicity. Companies with a wider diversity of board members are better financially. This is because an inclusive board is more likely to have a range of perspectives and opinions, leading to better decisions.
