Boards of directors responsibilities consist of three formal responsibilities that all members must adhere to: Duty of Care -Board members have the legal obligation to act in the best interests of the company and make decisions with the company’s mission in mind. Duty of Loyalty: Every member is required to put aside their personal and professional interests when making decisions on behalf of the company. Duty of Obeyance Each member has a legal obligation to ensure that the organization complies with all applicable laws and adheres to sound governance standards.
Beyond these three responsibilities, boards of directors have a more complex range of responsibilities, which vary according to the particular requirements of each business. If your company is a publicly traded business the responsibilities of your board will likely include overseeing the CEO and ensuring that financial statements are accurate. If you’re a start-up within your company your board could focus more on setting strategic goals and determining direction of your business.
Another aspect of the board’s responsibilities is ensuring the proper balance of risk management. Your board may be required to intervene in a crisis that may harm the image of your company even if they’re not legally or ethically responsible. Boards should also make sure their members are aware of the potential risks associated with being on their board and are able to oversee vs manage manage the risks appropriately.
Every board member plays an important and unique role in helping your business succeed. It’s crucial to be aware of your board’s responsibilities and how they relate to your organization’s strategic goals. Aprio’s software for board portals for instance it can help you manage your duties and run meetings efficiently.