Core Functions of the Board of Directors
Throughout the year, but most often in springtime, organisations around the country hold their Annual General Meetings. Amongst other matters, A.G.M.s provide a company’s members with an opportunity to elect the directors that will manage the company on their behalf.
For people who have not undertaken governance training, this post provides a very quick summary of the core functions of a Board of Directors. Broadly speaking, directors are collectively responsible for:
– Ensuring that the company achieves its mission and objectives as agreed by the Board. The mission and objectives should be in line with what is stated in the main and subsidiary objects of the company’s Memorandum of Association.
– Assessing and managing the risks faced by the company. The risks to be managed varies from one company to the next and may be categorised under the headings of strategic, financial, operational, governance, external and compliance risks.
– Monitoring company performance. Directors should be aware of how the company is performing at both an operational and strategic level. Tracking performance indicators, outputs and outcomes provides a means to monitor performance.
– Reviewing internal company controls. All companies should have a well developed set of internal controls to ensure good financial practices and compliance requirements are adhered to.
– Supervising the financial and budgetary planning processes. These processes help boards to make the most of the resources at the company’s disposal.
– Approving contracts, finance and investment in excess of specified thresholds. The approval process helps directors to monitor key financial decisions and contractual obligations of consequence to the company.
– Being accountable to members and external stakeholders. Directors act on behalf of the members and are required to report back to them at the A.G.M. Directors should also be mindful of the need to keep all key stakeholders informed of the company’s progress.
– Ensuring the company is managed appropriately. This is an important function, particularly where operational and management control is carried out by employees or agency staff.
– Meeting regularly as a board (as is appropriate) and working effectively in governing the company. Board members must be able to work as a coherent unit if they are to carry out the functions listed above!
It should also be noted that a Board of Directors must comply with the regulations and compliance requirements as set out in the Companys Acts.
You can learn more about the functions and responsibilities of board membership on CramdenTECH’s BoardPASS Standard training course.
Directors, Trustees and managers of SME’s and Not For Profits are busy people. So any time that can be saved searching for online guides to best practice in governance and management is important. We are sharing CramdenTECH’s top five bookmarked topic specific Irish reference sites. Hopefully you’ll find them as valuable as we do!