Roles & responsibilities of bod

1. Roles &
Responsibilities of
BOD
A Paper
Presented To
Amritsar Branch of NIRC of ICAI
By
Deepak Acharya
Bikaner
Deepak.acharyarj@gmail.com

2. Roles & Responsibilities of BOD
 Board of Directors:
“Board of Directors” or “Board”, in relation to a company, means the
collective body of elected or appointed members (Directors) who jointly
oversee the activities of a company or organization.
According to section 149(1) of the Companies Act, 2013, every company shall
have a Board of Directors consisting of individuals as directors and shall have-
(a) A minimum number of directors
(A)in the case of Public company- three directors,
(B) in the case of Private Company- two directors, and
(C) in case of One person company- one director
(b) A maximum of fifteen directors.
If the company wants to appoint more than fifteen directors, it can do so
after passing a special resolution.
So, the board of directors leads and controls a company and an
effective board is fundamental to the success of the company.
The process for running a board, sometimes called the board process, includes
the selection of board members, the setting of clear board objectives, the
creation and follow-up of assigned action items. If the minimum no. of directors
are not satisfied then there are no board in the company. The board are directly
accountable to the shareholders and each year the company will hold an annual
general meeting (AGM) at which the directors must provide a report to
shareholders on the performance of the company, what its future plans and
strategies are and also submit themselves for re-election to the board.
It is important that board meetings are held periodically so that directors can
discharge their responsibility to control the company's overall situation, strategy
and policy, and to monitor the exercise of any delegated authority, and so that
individual directors can report on their particular areas of responsibility.

3. Roles & Responsibilities of BOD
Roles: Jobs or positions that have a specific set of expectations attached to
them. The role of the Board is to oversee the management of the Corporation
and to represent the interests of all the Corporation’s stockholders. The Board
meets in regular session at least six times per year and as otherwise required.
Directors are expected to attend all Board meetings and meetings of committees
on which they serve, and they are frequently called upon for advice and counsel
between formal meetings. Directors review advance meeting materials that are
provided to each director in advance of each meeting. Each director is
encouraged and expected to ask questions of and raise issues with management
to ensure the conduct of careful and cautious oversight.
Responsibilities : A duty or obligation to satisfactorily perform or complete
a task (assigned by someone, or created by one's own promise or circumstances)
that one must fulfill, and which has a consequent penalty for failure.
So we can say that roles & responsibilities of BOD as well as Director
(Individual) are different. The responsibilities of the board are separate and
distinct from those of management. The board does not manage the company.

4. Roles & Responsibilities of BOD
Roles of the board of directors:
Boards have primary roles: to establish policies, to make significant and
strategic decisions, and to oversee the organization's activity. The roles of the
board of directors include:-
1) Establish vision, mission and values
2) Policy making
3) Set strategy and structure
4) Decision making
5) Delegate to management
1) Establish vision, mission and values:
o Determine the company's vision and mission to guide and set the pace for
its current operations and future development.
o Determine the values to be promoted throughout the company.
o Determine and review company goals.
o Determine company policies
2) Policy making:
o Effective execution of policy is necessary to fulfill the other roles.
o Policies define focus and differentiate responsibilities among the board,
the management, and the staff.
o Well-written policies lead to more efficient board functioning.
o Instead of having the same matter or very similar matters on the agenda
repeatedly, the board can develop a policy that covers the issue and leave
implementation of the policy to management.
o Boards have approximately 24 hours together each year, spread over
regular meetings.
o It is essential to use that time wisely.
3) Set strategy and structure:
o Review and evaluate present and future opportunities, threats and risks in
the external environment and current and future strengths, weaknesses
and risks relating to the company.
o Determine strategic options, select those to be pursued, and decide the
means to implement and support them.

5. Roles & Responsibilities of BOD
o Determine the business strategies and plans that underpin the corporate
strategy.
o Ensure that the company's organisational structure and capability are
appropriate for implementing the chosen strategies.
4) Decision making:
o Decision making involves making choices about the organization's vision,
mission, and strategies.
o Boards make decisions about issues that are strategic and significant,
such as whether to enter an affiliation agreement with another
organization.
o As decision makers, boards can also delegate nongovernance types of
decisions to others—and would be wise to do so.
5) Delegate to management:
o Delegate authority to management, and monitor and evaluate the
implementation of policies, strategies and business plans.
o Determine monitoring criteria to be used by the board.
o Ensure that internal controls are effective.
o Communicate with senior management.
Board committees play an important role in the governance process. It is useful
to periodically review the structure and functions of the committees and to
ensure that everyone knows what to expect from them.
The roles of the board of directors include:-
 Exercise accountability to shareholders and be responsible to relevant
stakeholders.
 Ensure that communications both to and from shareholders and relevant
stakeholders are effective.
 Understand and take into account the interests of shareholders and
relevant stakeholders.
 Monitor relations with shareholders and relevant stakeholders by
gathering and evaluation of appropriate information.
 Promote the goodwill and support of shareholders and relevant
stakeholders.

6. Roles & Responsibilities of BOD
RESPONSIBILITIES OF BOARDS:
Boards have numerous responsibilities: they oversee management, finances, and
quality; set strategic direction; build community relationships; establish ethical
standards, values, and compliance; and select a CEO and monitor his or her
progress. I believe that the 2 most important tasks are selecting the CEO and
establishing the direction of an organization. Although the management team
develops the strategic plan, it is the board's responsibility to accept or modify
the strategic plan and to set the direction. The board considers elements in the
environment—such as growing competition and changing patterns of care—and
develops a vision, a mission, strategic thrusts, goals, and tactics that respond to
the environment, all the while showing the organization's values.
Financial oversight is a familiar job that boards usually do well. Boards ensure
the use of financial controls; ensure that funds are prudently invested,
considering cash management, banking, and contracting parameters; and
establish policies related to budgets. Their goal is to protect the community's
assets. Oversight of the quality area often involves utilization and risk
management in addition to continuous quality improvement.
Attention to community relationships is a responsibility unique to not-for-profit
institutions. Inasmuch as board members have contact with the community, they
can be sensitive to the expectations and needs of its citizens and bring that
knowledge to the board room. The focus is on all those the organization serves:
consumers, businesses, elected representatives, payers, and collaborators.
Boards are paying more attention to the quality of life in their communities.
The ethical standards of the organization are determined by the behavior of the
board. Through its ongoing actions, the board decides what behavior will and
will not be tolerated. These actions supersede ethical statements—however
important such statements are-in showing an organization's true values. In
recent years, compliance issues have risen to board-level responsibility as well,
particularly as the media have reported people being sent to jail and
organizations and individuals being fined millions of dollars for breaches in
government regulations. Compliance is probably the only new issue that has
been added to board responsibilities over the past 10 years.

7. Roles & Responsibilities of BOD
When reviewing these responsibilities, it is important to note that the board as a
whole, and not any individual member, has the authority. Further, the board
exists only when it is in session. The committee is an appendage of the board,
and the board can delegate certain tasks to a committee or an individual, but
otherwise an individual board member has no prerogative. Thus, it would be
inappropriate for a board member to walk in to a manager's office and ask to
review the books or demand certain changes. Such actions, in fact, can cause
much disruption. The CEO is the full-time agent of the board and is the only
person directly accountable to the board.
The responsibilities of the board are separate and distinct from those of
management. The board does not manage the company.
The following are responsibilities of BOD:
 Approve the corporate strategy
 Test business model and identify key performance measures
 Identify risk areas and oversee risk management
 Plan for and select new executives
 Design executive compensation packages
 Ensure the integrity of published financial statements
 Approve major asset purchases
 Protect company assets and reputation
 Represent the interest of shareholders
 Ensure the company complies with laws and codes
 Free from conflicts that compromise judgment.
 Able to take positions in opposition to management.
 Represent companies view and account to the public
 Leading the company properly
 Establish appropriate internal control
 Decide formal schedule of matters of the meeting
 Determine the company`s mission and purpose
 Select and appoint CEO, Chairman and other board of director etc.
The points below outline the major responsibilities of the board of directors.
1) Recruit, supervise, retain, evaluate and compensate the manager. Recruiting,
supervising, retaining, evaluating and compensating the CEO or general

8. Roles & Responsibilities of BOD
manager are probably the most important functions of the board of directors.
Value-added business boards need to aggressively search for the best possible
candidate for this position. Actively searching within your industry can lead to
the identification of very capable people. Don’t fall into the trap of hiring
someone to manage the business because he/she is out of work and needs a job.
Another major error of value-added businesses is under-compensating the
manager. Managerial compensation can provide a good financial payoff in
terms of attracting top candidates who will bring financial success to the value-
added business.
2) Provide direction for the organization. The board has a strategic function in
providing the vision, mission and goals of the organization. These are often
determined in combination with the CEO or general manager of the business.
3) Establish a policy based governance system. The board has the responsibility
of developing a governance system for the business. The articles of governance
provide a framework but the board develops a series of policies. This refers to
the board as a group and focuses on defining the rules of the group and how it
will function. In a sense, it’s no different than a club. The rules that the board
establishes for the company should be policy based. In other words, the board
develops policies to guide it own actions and the actions of the manager. The
policies should be broad and not rigidly defined as to allow the board and
manager leeway in achieving the goals of the business.
4) Govern the organization and the relationship with the CEO. Another
responsibility of the board is to develop a governance system. The governance
system involves how the board interacts with the general manager or CEO.
Periodically the board interacts with the CEO during meetings of the board of
directors. Typically that is done with a monthly board meeting, although some
boards have switched to meetings three to four times a year, or maybe eight
times a year. In the interim between these meetings, the board is kept informed
through phone conferences or postal mail.
5) Fiduciary duty to protect the organization’s assets and member’s investment.
The board has a fiduciary responsibility to represent and protect the
member’s/investor’s interest in the company. So the board has to make sure the
assets of the company are kept in good order. This includes the company’s
plant, equipment and facilities, including the human capital (people who work
for the company.)

9. Roles & Responsibilities of BOD
6) Monitor and control function. The board of directors has a monitoring and
control function. The board is in charge of the auditing process and hires the
auditor. It is in charge of making sure the audit is done in a timely manner each
year.
The board of directors must decide which model is best for them.
1) Manager Focus – With this model, the manager dominates the board. We
can all think of situations where we have had one dominant individual in a
group. In this case the board functions are an advisory board and reacts to the
views of the manager. It is essentially a “rubber stamp” for the CEO. This
model often emerges when you have a charismatic CEO who is very dominant
and proactive in running the organization. In most cases this is not a good
model for a value-added business.
2) Proactive Board – This model is of a proactive board that speaks as one
voice. It speaks as one voice for the board and often has a proactive manager
that also speaks with one combined voice for the organization. This is a good
model because the manager and the board are on the same page and speak with
a single voice. This model is proactive in taking advantage of emerging
opportunities and is especially valuable for entrepreneurial businesses.
3) Geographic Representation – This model focuses on the members/investors
whom the board member represents. With this model, the board member feels
that he/she has been elected to the board to represent individuals in a geographic
location or special interest group. To better understand this model, think of an
individual running for a political office and then representing the interests of the
individuals located in that geography. This is often found in large boards,
typically of 24 to 50 individuals. With a large group like this there is a
temptation for the directors to represent the interests of the members/investors
in their geographic area or special interest group rather than the best interests of
the company. This is not a model that works well for most value-added
businesses.
4) Community Representation – In this situation the board member is
representing the community rather than the organization. An example of this is
a school board where an individual is elected to represent certain interests
within the community.

10. Roles & Responsibilities of BOD
These four models are ways in which the board and its organization function.
Often you have directors who have previously been on boards where they have
been chosen to represent a certain group or have been a rubber stamp for the
manager. So it is natural for a director to think that this is how all boards
function. But it is a good practice for boards to actively investigate and discuss
the models presented above and choose the right one for their situation. This is
usually a model where the directors are all active and present a single voice of
what is best for the organization. What is best for the organization will usually
also be good for the various members/investors and the stakeholders in the
community.
CONCLUSION
Unless the business is in a financial crisis, the BOD should spend no more than
20% of a BOD meeting on reviewing and approving the financials. An
important role of the BOD is the informal advising and coaching of the CEO
between BOD meetings. The most important thing the CEO needs from the
BOD is honesty and candor. The role of the Board in creating an environment
where a corporation can succeed is the key to future success of the business.
Company’s board of directors provides the company with direction and
advice. It is the responsibility of the board of directors to ensure that the
company fulfills its mission statement.
Name : Deepak Acharya
Reg. No.: CRO0369735
Course : CA Final with
Pursuing Article ship Training
Postal : 358, Narsisar Bass, Napasar,
Address Bikaner (Rajasthan)
M. No. : 8890223394, 9509897068
Email Id: Deepak.acharyarj@gmail.com