Boards of directors have three formal responsibilities every member must adhere to. Duty of Care Board members are legally required to act in the best interests of the organization, and make decisions keeping the company’s mission at the forefront. Duty of Loyalty – Each member must put aside their own professional and personal interests when making decisions on behalf of the company. Duty of Obeyance Each member has a legal obligation to ensure that the company is in compliance with all applicable laws and adheres to good governance standards.
Boards of directors have more complex duties than these three. They have responsibilities that vary based on the requirements of each business. For instance, if your business is a public corporation there’s a good chance that a major part of your board responsibilities includes overseeing the CEO and ensuring that the financial statements are accurate. If you’re a startup within your company the board might be more on setting strategic goals and determining direction of your business.
A board’s role also involves maintaining a balanced approach to managing risk. Your board may be required to intervene in a crisis that may harm the image of your company, even if they are not legally or ethically accountable. Boards must also ensure their members are aware of the risks that come with being a member of their board and are prepared to deal with these risks effectively.
Each board member plays a unique and important role in helping your business grow. It is essential to be aware of the responsibilities of your board, and how they connect to the goals of your company. Aprio’s software for board portals, for example, can help you streamline your duties and organize meetings efficiently.
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