Three Core Obligations of a Board of Directors and Stakeholders

A board of directors supervises and advises an organisation, operates independent from company management and makes the decisions that aid the company’s growth. It ensures that the business operates lawfully and in the best interest of employees, investors, and other stakeholders. Board members should possess diverse capabilities and experience, and work to create a culture that is open and trustworthy.

The size, composition, and structure of a board will differ according to the type of entity. This includes whether it is publicly traded (as a public company), privately held (private or limited) or owned by family members or employees (family-owned). The governance of every board is determined by its own set of rules that can be laid out in its constitution or other bylaws.

The board’s primary responsibility is three fundamental obligations.

A well-rounded board is made up of members with diverse backgrounds and experiences. They are experts in their field but are also generalists who are able to see things from a helicopter’s perspective. They are not afraid to ask hard questions and question management’s assumptions. The best boards promote diversity and encourage collaboration, communication and trust.

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