Board of directors
Board of Directors
The Board of Directors (pronunciation: /bɔːrd ɒv dɪˈrɛktəz/) is a group of individuals that are elected as, or elected to act as, representatives of the stockholders to establish corporate management related policies and to make decisions on major company issues.
Etymology
The term "Board of Directors" originates from the practice of having a literal board of people who directed a company. The term "director" comes from the Latin word 'directus', which means 'straight' or 'right'.
Roles and Responsibilities
The Board of Directors is responsible for protecting shareholders' interests, establishing policies for management, and making decisions on significant issues. This may include:
- Corporate governance: Ensuring the company's adherence to laws, regulations, and guidelines.
- Strategic management: Setting the company's overall direction and strategy.
- Financial management: Overseeing the company's financial performance and capital structure.
- Risk management: Identifying and managing potential risks to the company.
Composition
A Board of Directors typically includes both executive and non-executive directors.
- Executive Directors: These are senior managers of the company, such as the CEO, CFO, and COO. They are involved in the day-to-day management of the company.
- Non-Executive Directors: These directors are not part of the company's management team but provide independent oversight and bring outside expertise.
Related Terms
- Chairman: The individual who leads the board and is responsible for its effective functioning.
- Corporate Governance: The system of rules, practices, and processes by which a company is directed and controlled.
- Shareholder: An individual or institution that legally owns one or more shares of the stock in a public or private corporation.
External links
- Medical encyclopedia article on Board of directors
- Wikipedia's article - Board of directors
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