Monday, 9 March 2020

Board of Directors: A Powerful Instrument in Governance

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Board of Directors: A Powerful Instrument in Governance


Directors have many business responsibilities for ensuring the success of their company.
A board of directors is a body of elected or appointed members who jointly oversee the
activities of a company or organisation. A board’s activities are determined by the powers,
duties, and responsibilities delegated to it or conferred on it by an authority outside itself.
Directors are the members of the board of directors. The members of the board can be
insider or outsider. Insiders are those who are somehow related to the corporation and
may be referred to as executive directors.
Outsiders are not related to the company, they may be referred as non executive directors
or the independent directors.
The legal responsibilities of boards and board members vary with the nature of the
organisation, and with the jurisdiction within which it operates. For public corporations,
these responsibilities are typically much more rigorous and complex than for those of
other types.
In fact, all the Committees, both foreign and Indian, highlighted the criticality and
importance of these three committees. The nomination committee, for example, plays a
vital role in selecting independent non-executive Directors to the Board.
Similarly, the remuneration committee decides the remuneration to be paid to the nonexecutive
Directors and the audit committee ensures that the company accounts exhibit
the true and fair position of the company’s financial health.


Articles of Association: A document that specifies the regulations for a company’s operations
Board of Directors: A group of persons chosen to govern the affairs of a corporation or other
large institution.
Notes Memorandum of Association: Document that regulates a firm’s external activities and must be
drawn up on the formation of a registered or incorporated firm.
Nomination committee: A committee that acts under the corporate governance area of an
organisation.
Shareholders: Any person, company, or other institution that owns at least one share in a
company


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