Board of directors
The board of directors (or CA) is a group of people, morals or physics, charged to direct an institution, like a association, a Entreprise or a public corporation. It includes/understands several members, including one Chairman of the board indicated or elected, and a secretary.
The organization, the operation and the prerogatives of the board of directors are fixed by the statute of the institution.
Duties and capacities of the board of directors in the company
The members of the board of directors have special capacities Fiduciaire S by which they must thus act for the benefit of the whole of the owners of the company and especially the minority ones. In general, the board of directors is elected at the time of the general meeting of the shareholders. In the case of a joint stock company, the council is elected by the shareholders with proportion of many actions which it hold (Suffrage censitaire), in the case of a Coopérative CA is elected by all the members with the Vote for all (a man, a voice).
The members of CA are generally (but not inevitably) adherent shareholders/associated/with the company and their services are sometimes remunerated by Attendance fees, it is possible to be member of the board of directors of some companies at the same time or to have a particular delegation (Managing director).
The principal duties of the members of CA are to elect the president of their council and to name the director of the company (or the Chairman and managing director if the same person cumulates these two functions). The boards of directors are par excellence implied in questions of Propriété, of Stratégie, Finance, and Fusions and acquisitions.
The real capacity held by the board of directors largely varies company with another. In some, the board of directors forms a powerful body to which the direction is attached hierarchically. In other cases, the council is a fictitious organization which takes note of the decisions of the President Director-General and of the management of the firm.
Often, the managing director is at the same time the president of the council. Some support that is inappropriate in a company by actions because that gives to management too capacity on the council, decreasing its capacities of administration.
The most important councils create in their center one or more Comité S which receive specific tasks. For example, a committee of remunerations (or Compensation) is frequently formed to make decisions on the wages and the allowances of actions for the top management (or sometimes for the whole of paid). Others can include a committee of To that the and accounts, a committee of the legal businesses, and a committee of the Fusions and acquisitions.
Whereas the first of the responsibilities for the administrators is to make sure that the management of the firm discharges its work correctly, in practice that can be difficult. In a certain number of " scandales" in the Years 1990, a manifest defect appeared in investigations where the councils were not aware of the activities of the managers which they employed, and of the true financial statement of the company. A certain number of factors can go in the direction of this tendency:
the majority of the boards of directors takes its information almost only direction. This makes it possible the direction to turn information as she wishes it, even to hide facts or to lie on the health of the company.
- the members of the boards of directors have other activities most of the time, they rather seldom meet, and thus know each other badly between them. This can cause difficulties when it is a question of questioning direction in the coordinated and effective way.
- the chairmen generally have strong personalities and a certain charisma. Consequently, they are sometimes suspectés to handle the board of directors.
- the administrators can not have time or the capacities necessary to the good comprehension of the details of the trade of the company, thus allowing the directors to dissimulate problems.
- the same administrators who engaged the current manager supervise his performance. That makes difficult the objective and dépassionnée analysis of this performance.
- the administrators often think that a decision of managing, specifically those which succeeded well in the past, must be respected. It is often legitimate, but that can pose problem if the judgment of this manager is imperfect.
- All that goes in the direction of the culture of " not to scuttle the navire" at the board meetings.
For all these reasons, the role of the boards of directors in the Governorship of company and the means of improving their capacities of monitoring were examined in the last years. A new legislation in a great number of jurisdictions as of the analyzes more pushed by the boards of directors themselves caused changes in order to improve their performance.
The law Sarbanes-OxleyWith the the United States, the Loi Sarbanes-Oxley (SOX) introduced new standards within the board of directors. The members now risk important sanctions and countable custodial sentences in the case of frauds. The Internal controls are now of the direct responsibility for the administrators. Therefore, the great majority of the companies with dimensions now employed internal inspectors to make sure that the company conforms to several internal controls. Moreover, the law requires that the internal inspectors have to refer directly to the committee of audit. This group consists of a council of directing members of which more half are external with the company, one of those being an chartered accountant.
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