Board of directors

Board of directors is the internal authority of the corporation (next to the Management Board and the general meeting of shareholders) carrying out control and monitoring in corporations in the Anglo-Saxon model of corporate governance (United Kingdom, United States, Canada, Australia) and in Japan.

Composition of the Board of Directors

Board of Directors, in contrast to the Supervisory Board, is composed of not only independent, external members (external advisor), but a person directly involved in the management of the company, for example, retired and current managers. The Chairman of the Board of Directors is often the Chairman of the Board/CEO.

The size of the boards of Directors is different, usually optimal value is 7-8 members. With such number of members, problems with taking common decisions are reduced.

The role of the Board of Directors in the exercise of control and supervision of the company is relatively small due to the presence of independent, external members.

Within the framework of the Board of Directors internal committees are created, comprising the members of the Board. These committees are responsible for certain areas of activities. Usually following committees are formed: * Audit Committee * Salary Committee.

Rights and obligations of the Board of Directors

• appointment, evaluation and freeing the President/Director-General of the company and other representatives of senior executives in the enterprise,
• the supervision of the enterprise activity,
• review and approval of plans for the company,
• the development of recommendations for shareholders,
• participation in all the activities of corporations that do not require the consent of the shareholders,
• calculation of the remuneration of executives (by the Committee salaries)
• the protection of the owners of capital, by opposing all decisions, which could be detrimental to shareholders or threaten their interests,
• monitoring of financial statements,
• acceptance of the strategic plans of the company and other relevant activities from the point of view of the development of the corporation
• monitoring of the activities carried out by committees acting within the Board
• performing other functions laid down in the statutes of the company.

See also:

• Anglo-Saxon model of corporate governance
• Continental model of corporate governance

Board of directors — recommended articles

Anglo-Saxon model of corporate governance — Board — Nominee director — Shareholders Agreement — Consumer ombudsman — Quasi partner — Types of organisation — Powers of directors — Management rights

References

• Shleifer, A., & Vishny, R. W. (1997). A survey of corporate governance. The journal of finance, 52(2), 737-783.