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What Is Board of Directors (B of D)?
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. This also applies to German GMBH companies.
The board is responsible for protecting shareholders’ interests, establishing policies for management, oversight of the corporation or organization, and making decisions about important issues a company or organization faces.
Functions of a Board of Directors
In a broad sense, a corporate board of directors acts as a fiduciary for shareholders. The board is also tasked with a number of other responsibilities, including the following:
- Creating dividend policies
- Creating options policies
- Hiring and firing of senior executives (especially the CEO)
- Establishing compensation for executives
- Supporting executives and their teams
- Maintaining company resources
- Setting general company goals
- Making sure that the company is equipped with the tools it needs to be managed well