What is a Board of Directors?


The board of directors is one of the most valuable components of every company. No organization can fully function without it, because the direction in which the company moves, its goals, and objectives depend on the board of directors. However, the board of directors is a complex structure, where each has its role, duties, and legal responsibilities.

What is a board of directors?

Every organization has a board of directors, which is a group of executives who represent the interests of the shareholders. The board is the highest body of the company and the boarding process takes place periodically, at intervals of three, six months, or a year, depending on the rules of the company. The main objective of the Board of Directors is to determine plans, strategies, and policies, as well as the supervision of corporate governance.

Boards of directors are an essential part of any for-profit or non-profit organization.

What does the board of directors do?

A board of directors has several responsibilities. In addition to representing and acting in the interests of the shareholders, they must also think about the welfare of the company’s management, and have representatives from outside non-executive directors on their team.

External directors add balance to the activities of the entire board, as internal directors are guided by the interests of employees, management, and shareholders. Certainly, their expertise is highly valued, but outside directors allow you to look at the issue from a different angle, and perhaps find a wiser solution.

Typically, internal directors are not paid for their activities on the board because they are already successful higher-ups. But the services of outside directors are billable.

What powers do the board of directors have?

Any company usually has a charter that defines the responsibilities of board members. Here is what information is usually included in the articles of association:

  • Number of board members to be elected to the position
  • The method of hiring a board member (this may be by shareholder vote, or by the annual meeting)
  • Frequency of the board of directors

Generally, there are up to 15 board members, the most common occurrence is when the board has 9 members.

Board of Directors Titles and job descriptions

Below we describe five specific board positions and their responsibilities:

  • Chairman

The chairman is the top leader of the board, his or her main job is to manage groups of people, make sure the rules and policies are followed during the meeting process. In addition to this, chairpersons must perform other tasks as outlined in the bylaws.

  • Vice-chairman

The vice-chair is the main assistant to the chair and may take over the chair’s duties, during the chair’s absence. They, like the chairman, are closely related to the CEO and sometimes handle conflicts between members

  • Secretary

The secretary’s main duties are precisely to document and distribute minutes of board meetings, and they are also required to keep these records and perform other administrative tasks. Secretaries are also required to notify the other board members of the meeting, at least one to two weeks in advance.

  • Treasurer

The treasurers handle financial reports, and they should keep them clear and concise, so they can assist the other directors in making the right decisions.  Another of their responsibilities is to receive drafts of the company’s annual budget.

  • Board members and non-executive directors

Non-executive directors do not have anything to do with the above-mentioned duties and are generally willing to sit on the board themselves. Their role is to attend meetings, participate in discussions and take part in votes.