The Board of Directors

Chapter 04
 Board – A principal Instrument of
Governance
• A bridge between shareholders and
management
• Effective BOD brings cheaper capital, better
image and a preferred employer, take care of
all stakeholders
• It should be entrepreneurial, Strategic,
arrange resources, review management
performance and setting company vision and
mission etc.
 Types of BOD based on
performance
• Rubber stamp
• Paper board
• Good old boys board
• Celebrity board
• Real board
 Powers of a Board and its delegation

• Company constitution
• Law
• Resolution passed by shareholders
• Industry practice
• Delegation of powers
 Functions of a Board
• Oversight
• Approving budget and strategic plans, engaging with
auditors
• Directional
• Setting company’s objectives, mission and vision
• Appointment of key employees and directors
• Committees assisting board
• Advisory
• Advising management about new realties of
business, tax and legal etc. consultation
 Tools available to the Board
• Composition of the board
• Independence of the board
• Committees
• External help
 Responsibility and accountability

• Acting in the best interest of the company

• Accountability to owners
• Statutory duties (Minutes, informing
shareholders)
• Fiduciary or trusteeship duties
• Borrowing powers of board
 Types of BOD based on composition and
tenure
• Composition
• Unitary Board and
• Two tier board (Supervisory and management
boards)
• Advantages and disadvantages
• Tenure
• Common tenure
• Different tenures
 Balance on the board
Balance of
• Representation (all stakeholders)
• Talents and abilities (Legal, financial,
Operational, social, marketing and industry
specific)
• Power (Independent and non independent
directors)
• Attitude and views
 Board meetings
• Frequency and preparation for meetings
• Significant issues
• Board committees
• Good board room practices
• Role of chairman and CEO
• Duality of office; Chairman and CEO
• Appointment and approval of key officials