Unit 2

Part 2
Board of Directors’ Responsibilities and
Functioning
The BOD is appointed to act on behalf of the shareholders
to run the day to day affairs of the business.​
The BOD’s key purpose is to ensure the company’s
prosperity by collectively directing the company’s affair,
whilst meeting the appropriate interests of its shareholders
and other stakeholders.​
The BOD must deal with challenges and issues relating to
CG. CSR and corporate ethics​
Responsibilities of BOD​
General responsibilities​
Specific Duties and Functions
 A. General responsibilities
Act within the scope of power and authority of the company and
the Board​
Exercise their best care in the conduct and management of the business​
Act in the best interest of the company and for the common benefit of the
stakeholders​
Key functions of a present day board include:​
Guiding corporate strategy, major plans of action, risk policy,
annual business plans, overseeing major capital expenditures, acquisitions
and disposal​
Monitoring managerial performance, conflict of interest​
Achieving adequate returns for shareholders​
Compliance with laws and regulation​
Interests of stakeholders​
CSR
 B. Specific Duties and functions
To create the organization’s mission- which is the purpose for which it was
formed-and values statement​
To hire, evaluate, support and fire the executive director​
To develop company’s policies governing human resource management​
To review and accept the annual accounts and the audit report thereon and file the
same, after adoption by the members of the co. in the AGM, with the Registrar
of co.s​
Accepting fiduciary responsibility ​
Developing a strategic plan for the company and monitoring compliance with the
goals and objectives of the plan​
Periodically reviewing the company’s compliance with its mission and values
statements​
Maintaining records of the boards activities​
representing the company to its constituents and stakeholders​
To serve on company sub-committees and attend meetings of the board
11. To represent the ideas, culture, needs and desires of the community​
12. To develop policies and procedures that assumes that employees
are treated fairly and within the law​
13. To ensure that the company complies with all relevant laws, rules
and regulations and code of best practice​
14. Adoption of a system of internal checks and balances​
15. Identifying key risk areas and key performances indicators
and monitoring these factors with due diligence​
16. Adopting procedures for the directors either individually or as a group
in furtherance of their duties ​
17. Providing sound strategic policies and guidelines to the corporation
on major capital expenditure​
18. Establishing rules for an alternative dispute resolution system in
the corporation​
19. Appointment of a Compliance Officer​
20. Formulation and implementation of policies and procedures that
would ensure the integrity and transparency of related party transactions​
How a board can ensure good governance?
Susan F. Shultz, is an acclaimed executive search
expert specializing in corporate of governance−speaking
and writing on the competitive advantages of strategic
boards, suggests the following to have a strategic board
for ensuring good governance​
Small size of the board​
Independence of the board​
Diversity of the board ​
A well informed board​
The board should have a longer vision and
broader responsibility
 Functioning of the board of directors​
A. Meetings of the Board​
Section 173​
Section 174​
Adequate and timely information​
Powers of the BOD (Section 179)​
The general power of the board is subject to 2 limitation:​
Restrictions on the powers of the board contained in this Act, or in the MOA
or AOA or in any regulation​
Any power act or thing reserved to be exercised or done by the company in
general meeting 
Besides Section 179 there are certain other powers:​
Section 161​
Section 188​
section 182