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GROUP MEMBERS

CH.UMAIR SANA
MUZZAFFAR
AHMAD

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Role of Board of Directors
in Corporate Governance

Imperial Journal of Interdisciplinary Research (IJIR) Vol-2, Issue-5, 2016

ISSN: 2454-1362, http://www.onlinejournal.in

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Over view

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 Independence of Board
 Independent of the influence of Management
 Clearly know their responsibilities and powers
 Focus on Policy Making and general direction
 No role in day to day affairs
 No conflict of interest
 Understand the bank’s risk profile
- training programs for Board members

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 Board Sub-committees
 Preferably comprising non-executive board members,
in the areas of:
– Audit
– Risk Management
– Human Resource
– Credit
– Others
 With well defined objectives, authorities and tenure
 Without indulging in day to day affairs
 Full board to review their performance
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 Responsibilities of Board
 Setting the:
– Objectives
– Vision and Mission statement
– Strategy & Business Plan
 Providing oversight to ensure achievement of
organizational objectives
- within the legal and regulatory framework
and high business ethics
 Standing accountable to stakeholders
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 Responsibilities (Contd.)

 Appointing key executives – based on

FPT criteria
 Defining powers and responsibilities of
senior management
 Succession planning for key positions
 Disclosing conflict of interest
 Ensuring disclosure to promote
transparency and market discipline
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 Responsibilities –
Policy Framework
 Formulating policies :
– Credit
– Investments and Treasury Management
– Human Resources
– Internal Audit and Control
– Compliance
– Risk Management
– Other areas
 Communication and compliance
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 Responsibilities – Internal Audit

 Creation of separate department of

Internal Audit, with
– Professional Staff
– Full Scope coverage
– Audit Charter & Manual
 Head of Internal Audit reporting to the
board or the Audit Committee
 Appointment and remuneration of Head of
Internal Audit
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 Responsibilities - MIS
 Ensuring existence of an effective Management
Information System
 For keeping itself abreast with
– Activities
– Operating Performance & financial condition
– Operating environment
– Major Risks
 Evaluating Performance of the management -
based on certain benchmarks

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 Responsibilities – Board Meetings

 At least quarterly, preferably more

frequently
 Individual Directors to attend at least
half of the meetings in a year
 Information through agenda items in
advance
 Recording minutes of deliberations in
detail
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 Responsibilities - Others

 Reviewing the effectiveness of

Internal Controls
 Strengthening Risk Management

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 Responsibilities - Others

 Annual Financial Statements :

- Coverage of Directors’ Report
- Statement on Internal Controls
- Risk Management Framework
 Regulatory compliance

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 Conclusion
In the eyes of law, a company is an artificial person, who however, has no physical
existence and has neither a body nor soul. Therefore, a company cannot act itself in
its own person, it can only act through directors. The directors are a body to who has
delegated the duty of managing the general affairs of the company. A board of
directors (BODs) is considered as a crucial part of the Corporate Governance. Directors
are appointed by the shareholders of the company, who set overall policy for the
company. The corporate board of directors assists in corporate governance by
supervising executive management and makes strategic decisions for the company.
The board is generally supposed to govern the corporation on behalf of the
shareholders, effectively acting as trustees for stockholder interests. The roles and
responsibilities of a Board of Directors vary, depending on the nature and type of
business entity and the laws applying to the entity. Similarly, the establishment of
board committees is a means to channel the functions of a board into segregated and
specialized groups of directors that focus on specific subject of the organization.

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Thank You
Any Q?

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