What is a board

A board is a group of people who lead and manage a company, organization, or similar.

What does the board do?

The board functions as the top management of a company and is responsible for, for example, creating strategies and organizing the business, creating budgets and guidelines, hiring a CEO and/or overseeing what happens in the company. This includes having control over both accounting and asset management.

The tasks of a board are determined by the Corporations Act 2001. There is a lot of room for interpretation in the tasks and responsibilities of a board, and there is also a lot of variation in what a company needs. For example, smaller companies do not have the same needs as large corporations.

A board should have regular meetings to follow up on what is happening in the company and make necessary decisions. The board often asks the CEO or other responsible persons in the company to prepare matters for the board meetings with information that the board must consider and make decisions based on. The CEO should keep the board informed about the company’s progress every four months, either by holding a meeting or providing a written update.

The main responsibilities of the board

• Representing shareholders: The board represents the interests of shareholders and appoints directors to act on their behalf. Directors have a fiduciary duty to the company, meaning they are legally obligated to act in the best interests of the shareholders.
• Setting direction and Monitoring: In larger organisations, the board has a more of a «hands-off» role, focusing on direction-setting and monitoring the organisation’s performance. The board is responsible for governing the organisation, not managing its day-to-day operations.
• Compliance with legal requirements: The Corporations Act 2001 (Cth) specifies criteria for board composition, such as the requirement for at least one director to ordinarily reside in Australia for private companies and at least three directors, two of whom must ordinarily reside in Australia, for public companies. The ASX Listing Rules mandate that publicly listed companies creates an annual corporate governance report. This helps ensure transparency and accountability in how these companies are managed.
• Evaluation of board performance: The ASX Corporate Governance Council has guidelines on the optimal number of members for Australian boards. It’s important for the board to be large enough to handle the demands of the business, while still being manageable in size.