A board of directors, also known as “BoD” or a “board”, is a group of persons elected by shareholders to represent the interests of that company. Board members establish guidelines for the management and oversight of a company, as well as safeguarding the assets of shareholders. The board is a liaison between the shareholders and the company and is responsible for ensuring that the company operates in a legal and responsible manner.
This is a way of setting the tone for the entire company from the top with the basic rules of ethical conduct. It approves corporate strategy which is designed to create long-term value and sustainability, selects and supervises the CEO and the senior management team for running the company’s operations, including allocating capital and managing risks.
The board also reviews financial reports and makes sure that the operations of the company are in compliance with laws and regulations. It also communicates with all stakeholders, like employees, customers and suppliers, as well as the local community, to be aware of their concerns.
It is crucial for a company’s board of directors to have both outside and inside members, with the right mix of gender and ethnicity as well as age. Companies with a greater diversity of board members typically perform better financially. This is because the board with diversity is more likely to have a variety of opinions and perspectives that lead to better decisions.
