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The Role of a Board of Directors

A board of directors is a group of individuals who are elected to represent shareholders. They act as fiduciaries when making decisions and directing a company. They make policy and operate independently of day-to-day management. They develop high-level strategies and coach and guide high-level managers in their work. They are also vital in managing crises.

The role of the board is different depending on the organization but generally includes protecting shareholder interests as well as encouraging efforts to maximize value. It ensures that shareholders get accurate and timely information, and also promotes transparency in financial reporting and disclosure. It manages risk, and proactively engages with stakeholders to develop positive relationships and ensure that the corporate behaviour is consistent with social expectations.

Choosing the right members for your board is vital to the overall success of your company. It is important to choose people with the right mix of leadership, governance, and business knowledge to provide strategic direction and oversight. They must be able to effectively listen to diverse perspectives and engage in constructive debate and should reflect the core values of your company.

In addition, it’s an ideal idea to create a board that is as diverse as possible, and to have a diverse number of directors so that ties during voting on critical issues can be broken. Smaller companies usually choose between five and seven members. Larger companies should strive to have at minimum nine to eleven directors on the board.