A board of directors, also referred to as “BoD” or a “board”, is a group of individuals elected by shareholders to represent the interests of that company. The board members develop guidelines for overall oversight and management, while also protecting shareholder assets. The board acts as a liaison between the shareholders of the company and the company and is responsible for ensuring that the company operates in a legally-sound and responsible manner.
This includes setting the groundwork for ethical conduct and setting the tone at the top of the entire organization. It approves corporate strategy that aims to build long-term sustainability and value, and chooses and supervises the CEO and high-level management to manage the company’s operations, which includes allocating capital and addressing risks.
The board also reviews financial reports and assures that the company’s operations are in compliance with laws and regulations. Additionally, it communicates with the various stakeholders, including employees, suppliers, customers, the local community and other stakeholders, to be aware of their concerns. The goal is to improve the lives of the communities they reside in.
It is crucial for a company’s board of directors to include both outside and inside members, as well as different genders and ethnicity as well as age. In fact, companies with more diversity on their boards are better financially than those with no. This is because an inclusive board is more likely to have a range of opinions and perspectives, leading to better decisions.
