Directors of boards have three formal responsibilities every member must comply with. Duty of Care Board members are legally obligated to act in the best interests of the company, and take decisions that keep the mission of the company at the forefront. Duty of Loyalty: All members are required to put aside their own professional and personal interests when making decisions on behalf of the company. Obligation to obey — Every member has an legal obligation to ensure that the company is in compliance with all applicable laws and adheres to sound governance standards.
Beyond these three duties, boards of directors have a broader array of responsibilities, which vary according to the particular requirements of each organization. For example If your company is a public corporation then a major part of your board’s responsibilities is monitoring the CEO and ensuring that financial statements are accurate. However, if you’re an internally-run startup, your board may concentrate more on establishing strategic goals and setting the direction for your business.
The role of a board also includes maintaining a balanced approach to risk management. Your board could be required to intervene in a crisis that may harm the image of your company even if they’re not legally or ethically accountable. Boards should also make sure their members are aware of the risks of serving on their board and are prepared to manage the risks appropriately.
All board members play an important and unique role to play in assisting your business to succeed. It is important to know your board’s responsibilities, and how they relate with the company’s goals. Fortunately, tools like Aprio’s board portal software can help you streamline your tasks and organize meetings efficiently.
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