Board
of Directors
1. Composition of Board of Director
Board of Directors Composition varies
country to country. Different countries in the world have different Board
composition. Ideally the board should have sufficient number of independent non
executive directors, so that decision making is not influenced by executive
directors.
2. Policy Making
Board
of Directors is responsible for making different policy for the organization. The
major decision power also rest with the board of director i.e. loan from the
financial institution, dividend payment for the year, capital investment
decisions.
3. Working Style
Board
of Directors work through different committees, which includes, audit
committee, account committee, Hr Committee etc. These committees deliberate on the
matter under consideration and present its recommendation to board in board
meeting for endorsement or approval.
4. Performance Review
Board of Directors performance should be
reviewed in the best interest of the entity. There should be an adequate
mechanism for performance review of the board of directors. The number of
meeting held during the year and director attendance in those meetings may be
reported in financial statement or annual report as one of the controlling
tool.
5. Remuneration
Board
of Directors remuneration policy should be made by non executive directors, so
that a fair policy can be formulated for remuneration. Non executive member
would consider the interest of both director & shareholders and a balance
remuneration policy may be framed.
6. Internal Control
Board
of Directors must ensure that proper internal control system in place in the
organization. Board of director should also review such system on periodical
bases. It is also important to remember that international accounting standard
also requires the acknowledgment of this responsibility.
7. Relationship with Shareholder
Board
of Directors should keep in close touch with shareholder. Board of Directors should
inform shareholder for all major decision making. Board of Directors should
give shareholder a confidence that their interest is being effectively guarded.
