| With the transition of family and government owned, | | | | Members of the board can be owners, managers, or |
| businesses into the public ownership, awareness in the | | | | any other individual elected by the owners of the |
| roles and responsibilities of Board of Directors (BoD), | | | | business entity. Owners and/or managers of the board |
| as the guardian of investors' interest, become rather | | | | are known as 'inside' or 'interested' directors. Managers |
| critical to the average investor who would wonder | | | | are referred to as executive directors whilst members |
| who appoint board members, what they do and what | | | | of the board who are neither owners, nor managers |
| power they have to protect the interest of the | | | | are referred to as outside, independent, or |
| company. | | | | non-executive directors. |
| Whilst the term of 'boards of directors' often relates to | | | | The role and responsibilities of BOD depend on the |
| boards of business entities actively trading on public | | | | nature and type of business entity as well as the |
| markets, private and closely held businesses, including | | | | governing laws. There are numerous types of |
| family businesses, also have boards of their own. | | | | business entities available throughout the world such as |
| A BOD is a body of appointed or elected individuals | | | | a corporation, limited liability company, business trust, |
| who direct the activities of a company. It sometimes | | | | partnership, private limited company, and public limited |
| referred to as board of trustees, board of governors, | | | | company. |
| board of managers, executive board, or simply "the | | | | The appointment and removal of board members is |
| board." The BOD's main activities are determined by | | | | voted upon by the shareholders in general meetings. |
| the powers, duties, and responsibilities delegated to it | | | | Directors may resign from the board on their own |
| by the shareholders, as detailed in the company's | | | | accord, or may be removed by a resolution of the |
| bylaws which in turns specify the number of board | | | | remaining directors. In certain circumstances, the board |
| members, how to be chosen, and when they meet. | | | | of directors can appoint directors to fill vacancies as |
| In the case of a professional society with voting | | | | well. |
| members, the board reports to and acts on behalf of | | | | The removal of a director by a General Meeting |
| the organization full assembly, which usually select its | | | | resolution can be in practice rather difficult, particularly |
| board members. In a publically-traded company, the | | | | as a number of legal systems grant the director a right |
| board is elected by the stockholders, and is in the | | | | to receive special notice of any resolution to remove |
| highest authority in the management of the company. | | | | him, and is entitled to a hearing by the General Meeting. |
| In organizations, such as universities, where there is no | | | | In addition, the contract of service entitles the director |
| general voting membership the board is the supreme | | | | for compensation when removed. This often acts as a |
| governing body of the institution. | | | | deterrent. |
| The BOD main duties include governing the | | | | The BOD usually exercises its powers during its |
| organization by set up broad policies and objectives; | | | | regular meetings. In preparation to such meetings, most |
| choosing, appointing, supporting and reviewing the | | | | legal systems dictate that enough notice has to be |
| performance of the chief executive; making sure the | | | | granted to all of the directors in these meetings, and a |
| availability of adequate financial funds; approving annual | | | | quorum must be present prior to any business can |
| budgets; accounting to the stakeholders for the | | | | conducted. Although a board meeting may take place |
| organization's performance. The boards' legal | | | | without prior notice as long as all of its board members |
| responsibilities may vary depending on the nature of | | | | participate, the meeting's resolutions may be negated |
| the organization and on the jurisdiction within which it | | | | as not sufficient notice was given. The persuasive |
| operates. For public companies, these responsibilities | | | | rhetoric of minority members of the board might have |
| are much more complex and stringent than other | | | | influenced the majority to vote otherwise. |
| types. | | | | The members of the BOD usually run the business for |
| The BOD is made out of a group of people selected | | | | the benefit of its shareholders and exercise control |
| by the owners of a company, who have the power of | | | | and management over the company. The law often |
| decision-making, voting authority, and specific | | | | enforces stringent obligations on directors in relation to |
| responsibilities which is different from the authority and | | | | the exercise of their duties and responsibilities. The |
| responsibilities of owners and managers of the | | | | duties placed upon the members of BOD are solely |
| business entity. The BOD would typically select one of | | | | based on trust. In most laws, the powers of the board |
| its members to chair the board of directors, traditionally | | | | are granted to the board as a whole, and not in the |
| referred to as chairman. | | | | individual members. |