Corporate board( board of directors)

A board of directors is a group of people who jointly supervise the activities of an organization,
which can be either a for-profit business, nonprofit organization, or a government agency.A
board of directors (B of D) is an elected group of individuals that represent shareholders. The
board is a governing body that typically meets at regular intervals to set policies for corporate
management and oversight. Every public company must have a board of directors. Some private
and nonprofit organizations also have a board of directors.

Board of directors are shareholders of the company. Mostly, the directors are elected by the
shareholders and they in turn elect the Managing Director.

There are a variety of views about the roles and responsibilities of a board of directors and most
of these views share common themes. This document attempts to portray those themes by
depicting various views. Simply put, a board of directors is a group of people legally charged
with the responsibility to govern a corporation. In a for-profit corporation, the board of directors
is responsible to the stockholders -- a more progressive perspective is that the board is
responsible to the stakeholders, that is, to everyone who is interested and/or can be effected by
the corporation. In a nonprofit corporation, the board reports to stakeholders, particularly the
local communities which the nonprofit serves.

Major Duties and responsibility of Board of Directors

1. Provide continuity for the organization by setting up a corporation or legal existence, and to
represent the organization's point of view through interpretation of its products and services, and
advocacy for them

2. Select and appoint a chief executive to whom responsibility for the administration of the
organization is delegated, including:

- to review and evaluate his/her performance regularly on the basis of a specific job description,
including executive relations with the board, leadership in the organization, in
product/service/program planning and implementation, and in management of the organization
and its personnel

- to offer administrative guidance and determine whether to retain or dismiss the executive

3. Govern the organization by broad policies and objectives, formulated and agreed upon by
the chief executive and employees, including to assign priorities and ensure the organization's
capacity to carry out products/services/programs by continually reviewing its work

4. Acquire sufficient resources for the organization's operations and to finance the
products/services/programs adequately
5. to provide for fiscal accountability, approve the budget, and formulate policies related to
contracts from public or private resources

- to accept responsibility for all conditions and policies attached to new, innovative, or
experimental products/services/programs.

. Determine the Organization's Mission and Purpose

Select the Executive

. Support the Executive and Review His or Her Performance

. Ensure Effective Organizational Planning

. Ensure Adequate Resources

. Manage Resources Effectively

. Determine and Monitor the Organization's Products, Services and Programs

. Enhance the Organization's Public Image

. Serve as a Court of Appeal

. Assess Its Own Performance

Appointment of Board of Directors

The functions and responsibilities of the board of directors differ based on the board composition
and its relationship with the company regarding its management. Some directors on the board are
appointed by the government to look after its interests.

Some directors are appointed by the financial institutions like Industrial Finance Corporation of
India, Industrial Development Bank of India, Industrial Credit and Investment Corporation of
India and State Financial Corporations which provide long-term loans and advances to the
company, to safeguard their interest.
Legal Functions of Board of Directors

The board of directors also perform certain legal functions required as per the Companies Act
1956 like criminal liabilities.

The following table presents legal functions of the boards.

Table1: Legal Functions of Board of Directors

I. Duty of Loyalty
 Avoiding conflicts of Interest
 Fairness
 Corporate Opportunity (Ahead of Personal)
 Confidentiality
II. Duty of Care
 A director performs his duties in good faith and in a manner that he serves for the best
interest of the corporation, and as an ordinary person in a like position under certain
circumstances.
 Attention at meetings, Reliance on management and professional information and
Delegation (to management to operate the business)
 Decision Making – exercise reasonable business judgement.

Duties & Responsibilities of Board of Directors

The duties and responsibilities of the board of directors are as follows

1. Trusteeship: The board of directors act as trustees to the property and welfare of the
company. Hence, the board must use the company’s property for the long-run gain of the
company, but not for their personal use.
2. Formulation of Mission, Objection and Policies: Board of directors must see the long run
view and have long run perspective of the company. The board formulates, reviews and
reformulates the company’s mission, objectives and policies which forms the basis for
strategy formulation and implementation.
3. Designing Organizational Structure: The board designs the structure of the organization
based on the objectives, policies, environmental factors, degree of competition, role of
quality, expectations of employees etc.
4. Selection of Top Executives: The board should assume the responsibility of screening
and selecting the top executives who can formulate and implement the strategies. Chief
executives are key personnel in the process of strategy implementation.
5. Financial Sanctions: The important financial decisions like sanctioning of finances to
various projects, reserves, distribution of profit to shareholders and repayment of loans
and advances etc., are taken by the board. Further, the board reviews the financial
performance of the company from time to time and reformulates the financial policies.
6. Feed forward and Feedback: The board has to obtain information from the external
environmental factors and feed that information forward to various key points in the
company in order to prevent possible hurdles and mistakes in the process of achieving
organizational goals. Further, the board also obtains the information from internal sources
of the organization, and feeds it forward to prevent possible failures in decision-making by
the top level executives.
The board also feeds the information back to the executives regarding their failures in
decision-making with a view to avoid the recurrence of such mistakes. Thus, feedback of
information helps the board to check and control the activities as board has the ultimate
responsibility for the success of the company.

7. Link between the Company and External Environment: The board acts a vital and
continuous link between the company and external environment like government, other
companies, social and economic institutions etc.

1. Duties and Responsibilities

Under the Company Law, the Board of Directors is under obligation to, among other things:

a. deliver an annual report (that includes the financial statement of the Company) after it has
been examined by the Board of Commissioners to the General Meeting of Shareholders
within 6 months the end of the Company's financial year;
b. prepare a business plan (that includes an annual budget plan) for the next financial year
prior to the commencement of the next financial year and submit the business plan to the
Board of Commissioners or General Meeting of Shareholders of the Company as
regulated in the Articles of Association of the Company;
c. prepare and maintain a Register of Shareholders of the Company and a Special Register
containing information on the share ownership in the company and/or other companies of
members of the Board of Directors and the Board of Commissioners and their immediate
family members;
d. archive the resolutions of the Shareholders and Board of Directors of the Company and
all other corporate documents;
e. obtain approval from the General Meeting of Shareholders for the transfer or the
encumbrance of more than 50% of the total assets of the Company in one or more
transactions, whether related or not, in one or more financial years as regulated in the
Articles of Association of the Company;
f. hold a General Meeting of Shareholders (including to send invitations or summons to the
shareholders) either annually or extraordinary as necessary or requested by certain
Shareholders, Commissioners or Directors of the Company as regulated in the Articles of
Association of the Company;
g. notify the Minister of Law and Human Rights (the "MLHR") of any change to the
composition of the Boards of Directors or Commissioners of the Company within 30
 days as of the date of the resolution of the General Meeting of Shareholders with regard
to the change;
h. record any transfer of shares (or encumbrance of shares) in the Company in the Company
Register and notify the MLHR regarding the change of the shareholders within 30 days as
of the date of the transfer of shares;
i. notify the creditors of the Company if there is a reduction in the capital of the Company
in at least one newspaper within 7 days of the resolution of the General Meeting of
Shareholders regarding the reduction.

Also, in certain transactions such as the merger, acquisition, consolidation, segregation or

dissolution of the Company, the Board of Directors also has a number of obligations regarding
the transaction, such as to prepare the transaction plan, announce the proposed transaction in the
newspapers, or act as the liquidator in the dissolution of the Company.

Liabilities of board of directors

Directors must manage the company in good faith and with full responsibility. Every member of
the Board of Directors is personally liable for any loss suffered by the Company if he/she acts
wrongfully or fails to perform his/her duties in the manner stated above. If the Board of Directors
consists of more than one member, the above liability applies jointly among each of the
members.

However, a Director will not be personally held liable if he/she can prove that:

a. the loss suffered by the Company is not due to his/her wrongful actions or failure to
perform his/her duties;
b. he/she has managed the Company in good faith and prudently for the benefit of the
Company and in accordance with the purpose and objectives of the Company;
c. he/she has no conflict of interest either directly or indirectly in the management of the
Company that causes a loss; and
d. he/she has taken all the necessary actions to prevent the occurrence or continuance of the
loss.

In the case of the bankruptcy of the Company, a Director will not be held liable for the
Company's bankrupt if he/she can prove that:

a. the bankruptcy is not due to his/her fault of negligence;

b. he/she has managed the Company in good faith, prudently and with full responsibility for
the benefit of the Company and in accordance with the purpose and objectives of the
Company;
c. he/she has no conflict of interest either directly or indirectly in the management of the
Company; and
d. he/she has taken all necessary actions to prevent bankruptcy.

Further, the Board of Directors may also be held liable in the following transactions/situations:
 a. Share buyback

The Directors are jointly and severally liable to shareholders acting in good faith who
suffer a loss from a share buyback transaction conducted by the Company but voided by
law.

b. Inaccurate or misleading financial reports

Unless the Directors can prove that it was not caused by their fault or negligence, the
members of the Boards of Directors will be held jointly and severally liable to third
parties who suffer a loss due to an inaccurate, untrue or misleading report being
presented.

c. Failure to accept returned interim dividends

The Directors will be held jointly and severally liable for company losses if the
Shareholders cannot return interim dividends that have been declared.

d. Failure to report their share ownership

Members of the Board of Directors who fail to report their shareholdings will be held
personally liable if the failure causes the Company to make a loss.

e. Liability for bankruptcy losses

In the event that bankruptcy occurs as a result of the fault or negligence of the Board of
Directors and the assets of the Company are insufficient to cover the losses incurred in
the bankruptcy, the members of the Board of Directors may be held jointly and severally
liable for the balance of the obligations that cannot be repaid from the assets.

Attributes of Effective Board Directors

Being a board director requires a certain amount of nous, intelligence and compassion. If you’re
an aspiring board director, you might be wondering whether you’ll have what it takes. But as
long as you have these attributes (or are willing to learn them), you can become an effective
board director.

Emotional Intelligence

Emotional intelligence (EQ) is potentially more important than intellectual intelligence (IQ). EQ
is defined simply as having the ability to monitor both your own and other people’s emotions, to
discriminate between different emotions and label them appropriately, and to use emotional
information as a guide for your own thinking and behaviour.

When you know yourself and how you connect with others, you are in a much better position to
handle stressful situation and make better decisions.

The Ability to Commit

Commitment is one of the key aspects in an effective board director. Often, people don’t realise
just how time-consuming sitting on a board can actually be. It’s not just a matter of turning up
once a month for a few hours – you must also take things like committee meetings, necessary
training, strategy and planning days and company events into consideration.

You may also be involved in fundraising events, networking, acting as an ambassador for the
organisation, and building sustainable relationships, not just with your fellow board directors, but
with the stakeholders, investors, management team and donors. This workload can be
manageable, even if you have a day job. But you have to first decide whether you’re committed,
because if you’re not, it will soon show.

Equanimity

Equanimity is a little-known but highly effective personality trait to have. It applies to the ability
to remain calm, composed and collected, even under stressful or difficult circumstances. This is a
beneficial attribute to have in the boardroom because tensions can become high, and arguments
occur. Being able to remain calm no matter how fractious the boardroom gets will land you in
good stead.

Keeping your cool when everyone else is losing theirs will help you make better decisions.
Listen to your fellow board directors, even in the most heated arguments (and if you have that
aforementioned emotional intelligence, this won’t be a problem for you). Communicate with two
ears and one mouth, and think before you speak.

The Ability to Prepare

Being properly prepared is an essential attribute to board directors. If you’re heading into a board
meeting with absolutely no idea of what’s to come, it will never look good – regardless of
whether it’s your first board meeting or your fiftieth. When you are the most prepared person in
the boardroom, you’re also the most influential, and that’s a highly desirable position to be in.

To be properly prepared, read all the papers before the meeting to make sure you fully
understand everything that will be discussed. And if you don’t understand something, ask about
it beforehand. You should also conduct prior research. Not just about the topics to be discussed,
but the influences that could apply to your fellow board directors, and the key challenges that are
currently being faced by the stakeholders.
Being Open-Minded

The best boards are those that are diverse and respectfully so. Diversity isn’t effective if it’s met
with conflict and aggression from those who have opposing ideas. Being a successful board
director includes keeping an open-mind to that diversity and being vulnerable enough to admit
when your mind is being changed.

While it can often be difficult to put your personal opinions aside when it comes to various
topics, a successful board director will be able to take on new ideas and allow their opinions to
be challenged.

Being Mindful of Your Impact

The boardroom, when run correctly, is where a lot of change can occur. This is a powerful
influence that can either be positive or negative, and a successful board director will always
remember to be mindful of the impact his/her decisions can make.

Thinking both on the micro and macro levels can help you take into consideration any possible
ripple effect that will happen through decisions made by your board. Think about the impact
your choices will make on everything, from the other board directors to the stakeholders,
investors, donors and the community, and take that into account with each decision.

Bravery

Part of being an effective board director is being brave and having great leadership skills, and if
your personality is more prone to passivity, you might find this hard. But change will never be
brought on by being passive. If you aren’t brave enough to speak up in the boardroom, especially
when it’s about issues you care about, you will never be able to change things. If you want to
make an impact, you have to make waves.

Bravery in the boardroom means having the ability to understand which important questions
need to be asked, and having the smarts to know when you should ask them. Asking the right
questions and challenging the assumptions made by both yourself and your fellow board
directors can make sure your board remains on topic and on the right path.

Saying No to Good Ideas

A great director is comfortable saying no, even to the good ideas. This can be hard for some, but
it’s a skill you will come to learn throughout your career. Having the ability to prioritise the best
ideas while refusing others (no matter how great they may seem) will only serve to benefit your
board. Focusing on the best ideas and utilising your resources accordingly will ensure you
always tackle what’s most important.

Knowledge related to task

Passion for work

1.  Remain consistently dedicated to refining and fulfilling the mission.

2.  Develop and adhere to a clear and engaging board selection, recruitment and orientation
process.

3.  Organize responsibilities, set goals and measure the performance of the Board as a whole
and its individual members.

4.  Define and execute the processes and expectations for hiring, evaluating and
compensating the CEO.

5.  Understand and act with the belief and knowledge that the Board governs while the staff
manages and these are separate, yet fully aligned functions.

6.  Build a leadership pipeline for Board officer positions and offer mentoring/training and
other supports for to enhance the success of all Board members.

7.  Create a cycle of respect, trust and candor among all members and an environment where
generative questions are welcomed.

8.  Act as an ambassador for the organization and its ‘work’ while upholding the duties of
care, loyalty, and confidence.

9.  Actively build relationships with individuals outside the organization that advance the
organization’s overall mission, vision, and constituents.

10. Embrace change while being willing to take risks that can lead to rewards.

CORPORATE REPUTATION
When it comes to an organization’s success and benefits, one of the most import things that
come to mind is the corporate reputation. There is no doubt about the fact that if a company
wants to be successful in the first place then it will need a great reputation and that is the
corporate reputation.

Having a good reputation would mean that the company is performing well and is able to provide
the customers with what they need. So, there is no doubt about the fact that corporate reputation
tends to be one of the most important aspects of a growing business.
To define corporate reputation, we can say that it is basically the overall estimation of the
company or any organization that is held by the stakeholders of the internal and the external
market.

In simpler words, corporate reputation is the impression that significant people have about your
business. The company’s past actions and future predictions are the factors that govern the
corporate reputation.

COMPONENTS of Corporate Reputation:

Corporate reputation is the overall estimation in which an organization is held by its internal and
external stakeholders based on its past actions and probability of its future behavior. While being
something that is so vitally important, many companies do not give a second thought about
corporate reputation. Even if a company is good at taking care of their existing customers, a
business may not notice the possibility of more business if their reputation was managed well.

1. Ethical:the organization behaves ethically, is admirable, is worthy of respect, is

trustworthy.
2. Employees/workplace:the organization has talented employees, treats its people well, is
an appealing workplace.
3. Financial performance:the organization is financially strong, has a record of
profitability, has growth prospects.
4. Leadership:the organization is a leader rather than a follower, is innovative.
5. Management:the organization is well managed, has high quality management, and has a
clear vision for the future.
6. Social responsibility:the organization recognizes social responsibilities, supports good
causes.
7. Customer focus:the organization cares about customers, is strongly committed to
customers.
8. Quality:the organization offers high quality products and services.
9. Reliability:the organization stands behind its products & services, provides consistent
service.
10. Emotional appeal:(it is an organization I feel good about, is kind, is fun.

BENEFITS OF CORPORATE REPUTATION: