A board of directors is accountable for strategic planning and decision-making of the company in line with their vision, goals and principles. They are able to accomplish this because they are a group of individuals who are elected by the shareholders to hold authority over the company as well as its assets.
Boards are very busy and can’t always meet to discuss all the crucial issues that face a nonprofit particularly in times of emergency. Many boards set up an executive committee to tackle these issues. An executive committee is composed of a group with strong leadership ties that can be assembled quickly to discuss important issues that affect the board.
The executive committee functions as an advisory committee to the full board. They meet more often, are more efficient and can draw on research results to make board recommendations. This enables the board to concentrate on matters of greater importance and delegate lower-level issues to www.boardroomsupply.com/tips-to-organize-an-efficient-online-board-meeting/ the committee to deal with.
The executive committee will often take on the role of being a leader in board development, by providing training, mentoring and conducting self-evaluations each year. This helps streamline many of the things that the board must carry out and helps keep everyone aligned and on the same board when it comes down to making decisions and aligning.
It is essential that both the executive committee as well as the board of directors are aware that they are accountable to the board. They are required to submit regular meeting notes, documentation, and a record on votes. This is because, under common law areas, directors are thought to be agents of the company and therefore have a binding effect on the company through their actions. This principle was reiterated by the House of Lords’ in the 1909 case Turquand v. Salmon, and is widely accepted.
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