Boards of Directors Responsibilities

Boards of directors are required to fulfill three formal responsibilities, which each member is required to comply with. Duty of Care Board members are legally required to act in the best interests of the company and make decisions keeping the company’s mission at forefront. Duty of Loyalty — All members must put their personal and professional interests aside when making decisions for the company. Obligation to follow the law Every member has an legal obligation to ensure that the organization complies with all applicable laws and adheres to sound governance standards.

Boards of directors have more complicated responsibilities than these three. These responsibilities vary based on the requirements of each company. For example If your company is a public entity is likely that the majority of the responsibilities of your board includes overseeing the CEO and making sure the financial statements are in order. But if you’re an internal company, your board could be more focused on developing strategic board bookit goals and setting the direction for your business.

Another aspect of the board’s responsibilities is ensuring that the board has the right balance of risk management. For instance, your board could be required to intervene and prevent any crises that could harm the reputation of your business even if it’s their legal or ethical duty. Boards should also ensure that their members are aware of the pitfalls of being on their board and are able to deal with these risks effectively.

Each board member plays an important and distinct role in helping your business grow. It is essential to be aware of the duties of your board and how they are connected to the objectives of your organization. Fortunately, tools such as Aprio’s board portal software can assist you in reducing your tasks and organize meetings efficiently.

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