Directors of boards are required to fulfill three formal responsibilities, which every member must adhere to. Duty of Care Board members are legally obligated to act in the best interests of the company and take decisions that keep the company’s mission at the forefront. Duty of Loyalty – All members are required to put aside their own professional and personal interests when making decisions on behalf of the company. Duty of Obeyance Every member is legally obligation to ensure that the organization is in compliance with all applicable laws and adheres governance standards.
Beyond these three obligations, boards of directors are entrusted with a wider array of responsibilities, which vary according to the specific needs of each company. If your company is a publicly traded company the responsibilities of your board will likely include overseeing the CEO, and ensuring that the financial statements are correct. However, if you’re an internally-run startup, your board might focus more on developing strategic goals and setting the direction for your company.
A board’s role also involves making sure that there is a balance in risk management. For instance, your board may need to step in and thwart any crises that threaten the reputation of your business even if it’s not their legal or ethical duty. Boards should also make sure their members are aware of the dangers associated with being on their boards and are able to manage the risks in a responsible manner.
Every board member plays a unique and important role in helping your business grow. For this reason, it’s important to have a clear understanding of the duties assigned to your board and how they are connected to your company’s strategic goals. Aprio’s board portal software for instance, can help you streamline your duties and run meetings efficiently.
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