Three Core Obligations of a Board of Directors and Stakeholders

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A board of directors is independent from the management of a company and supervises and provides advice to a company. They also make decisions to help it thrive. The board ensures that the business is operating in compliance with the law and is in the best interests of employees, investors and other stakeholders. The Board members must possess broad capabilities and experience, as well as are expected to foster an environment of trust and transparency.

The size, composition, and structure of a committee will differ depending on the nature of the entity. This includes whether it is publicly traded (as a public company), privately held (private or limited) or owned by employees or family members (family-owned). The board’s governance is controlled by its own set of rules, which could be set out in its constitution or other bylaws.

The primary responsibility of the board is three main obligations.

A well-rounded board is made up of members with diverse backgrounds and experiences. They are generalists who can provide a helicopter’s perspective and yet are experts in their particular areas of expertise. They are not afraid to ask challenging questions and challenge management’s assumptions. The best boards promote diversity and promote communication, collaboration, and trust.

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