Role of Directors


Q-1. What is the meaning of Board of directors? Describe the role of Board of Directors.

Ans: Board of Directors: The Board of Directors is the individuals elected by a corporation’s shareholder to oversee the management of the corporation. In the words, the group of people responsible for supervising the affairs of a corporation is called Board of Directors. The members of a Board of directors are paid in cash and stock, meet several times each year, and assume legal responsibility for corporate activities. The Board of Directors generally sets broad corporate policy rather than participating in day to day managerial decisions, although selection of the CEO is the board’s responsibility. Members are elected by the firm’s stockholders and may or may not be stockholders themselves. They are also called Directorate.
Role of the board of directors
Board can help greatly by focusing on four key areas:
  i. Establish vision, mission and values
        o Determine the company’s vision and mission to guide and set the pace for its current operations and future development.
        o Determine the values to be promoted throughout the company.
        o Determine and review company goals.
        o Determine company policies.
  ii. Set strategy and structure
        o Review and evaluate present and future opportunities, threats and risks in the external environment and current and future strengths, weaknesses and risks relating to the company.
        o Determine strategic options, select those to be pursued, and decide the means to implement and support them.
        o Determine the business strategies and plans that underpin the corporate strategy
        o Ensure that the company’s organizational structure and capability are appropriate for implementing the chosen strategies.

iii. Delegate to management
      o Delegate authority to management, and monitor and evaluate the implementation of policies,...