The board of directors supervises and provides advice to an organization, is independent of the management of the company and makes decisions that assist the company to grow. It ensures that the entity operates in compliance with law and is in the best interests of investors, employees and other stakeholders. Board members should have broad expertise and experience, and are expected to foster a culture of trust and transparency.
The size, composition, and structure of a committee will differ according to the type of entity. This includes whether it is publicly traded (as an open company), privately held (private or limited), or owned by employees or family members (family-owned). The rules governing each board’s management are specified in the articles of incorporation, or other bylaws.
A well-rounded Board includes members with a variety of experiences and backgrounds. They are generalists who can keep a broader perspective, and yet are experts in their respective areas of expertise. They are willing to tackle tough questions and challenge management’s ideas. The best boards also promote diversity, and promote collaboration as well as communication and trust.
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