Board of directors
A board of directors is an executive committee that supervises the activities of a business, a nonprofit organization, or a government agency.
"Board room" and "board of trustees" redirect here. For other uses, see supervisory board, board room (disambiguation), and board of trustees (disambiguation).
The powers, duties, and responsibilities of a board of directors are determined by government regulations (including the jurisdiction's corporate law) and the organization's own constitution and by-laws. These authorities may specify the number of members of the board, how they are to be chosen, and how often they are to meet.
In an organization with voting members, the board is accountable to, and may be subordinate to, the organization's full membership, which usually elect the members of the board. In a stock corporation, non-executive directors are elected by the shareholders, and the board has ultimate responsibility for the management of the corporation. In nations with codetermination (such as Germany and Sweden), the workers of a corporation elect a set fraction of the board's members.
The board of directors appoints the chief executive officer of the corporation and sets out the overall strategic direction. In corporations with dispersed ownership, the identification and nomination of directors (that shareholders vote for or against) are often done by the board itself, leading to a high degree of self-perpetuation. In a non-stock corporation with no general voting membership, the board is the supreme governing body of the institution, and its members are sometimes chosen by the board itself.[1][2][3]
Terminology[edit]
Other names include board of directors and advisors, board of governors, board of managers, board of regents, board of trustees, and board of visitors. It may also be called the executive board.[4]
Typical duties of boards of directors include:[5][6]
The legal responsibilities of boards and board members vary with the nature of the organization, and between jurisdictions. For companies with shares publicly listed for negotiation, these responsibilities are typically much more rigorous and complex than for those of other types.
Typically, the board chooses one of its members to be the chairman (often now called the "chair" or "chairperson"), who holds whatever title is specified in the by-laws or articles of association. However, in membership organizations, the members elect the president of the organization and the president becomes the board chair, unless the by-laws say otherwise.[7]