Governance & Boards for Companies & Not for Profits

© 2015 Langoor Digital Pvt. Ltd. | www.langoor.com1 © 2015 Langoor Digital Pvt. Ltd. | www.langoor.com1

Boards 101By Ruchir Punjabi

© 2015 Langoor Digital Pvt. Ltd. | www.langoor.com2

An Agency of Shareholders

Shareholders / Members

CEO

Management

Board of Directors

Committees


Brief History

Informal examples include : Governing councils & Parliaments East India Company

Formal : Courts in England recognised the

relationship between the shareholders and a Board in 1904


The Board Governs and the Management Manages


Purpose

Further interests of the Organisation

Define and assess strategy

Trade solvently

Drive financial performance

Hire, manage and fire the CEO

Manage legal, OH&S, compliance and all other risks (Australia)


When?

Entrepreneur with Advisors (<$2Mn)

Advisory Board (<$15-20Mn)

ASX / Compliance Specialists (Post-listing Experience)

Statutory & Executive Board (Pre-Listing or >$20Mn)


Ideal Board Size

Preferably always less than 10Preferably an odd number

Organisation / Board Ideal Number

Advisory Board 3 to 5

Listed Board / Large Organisation 5 to 9

Not for Profit 7 to 9


A Good Board

Mix of Skills & Experience

Strategy

Financial Prudence

Compliance

Independence & Accountability

Credibility (inc. Fundraising for NFPs)


Director’s Duties & Responsibilities

Fiduciary Duty Fiduciary duty is a legal duty to act solely

in another party's interests (in this case, the org)

Act in good faith for a proper purpose Avoid conflicts of interest and not misuse

information or position Act with care and diligence Specific duties related to laws

(insolvency, declaration of interests, etc)


Role of the Chair

Single most important role in determining effectiveness of a Board of Directors

Key liaison between the Board and the CEO (inc Management)

mentor and sounding board for the CEO

Ensures that the information flow to the Board is comprehensive

Creates an effective environment for robust discussions


The CEO Relationship

Single most important function of the Board is to hire, fire and manage the CEO

Enablement and Accountability of the CEO crucial to the organisation’s success

Create an environment for the CEO to leverage the Board to help the CEO and organisation reach their full potential


Board Remuneration

Depends on stage of your business

A stipend + expenses normal

Vesting of shares over time also a common option

NFPs normally only cover expenses

A remuneration committee can help

Surveys available (similar to employee pay surveys)


Independence of the Board

Executive v/s Non-Executive Managing Director v/s CEO

Different countries have different trends on independence Consistently however independence is

considered positive


Board Operations

Role of the Agenda Planned agenda really useful Distribute papers in advance Focus on high-level discussions;

keep details for noting Secretary of the Board and/or Company

Committees


Committees

Committees useful to “delegate” deliberations in key areas

A Board can never delegate responsibility i.e. committees only recommend – Board doesn’t have to adopt the recommendations

Example committees include Audit & Risk, Investment, Infrastructure, Appointments & Nominations, etc.

Also an opportunity to leverage expertise in different areas


Questions?

It is easy to over cook the process Start incrementally and build on the

process Add people slowly over time – no

need to rush but key to get people and Board culture right

Chair and CEO roles and their relationship crucial to the success of the Board

?


Thank You

[email protected], Melbourne,Ahmedabad, Bangalore,Hong Kong, Singapore

www.langoor.com

Governance & Boards for Companies & Not for Profits

Leadership & Management

Transcript of Governance & Boards for Companies & Not for Profits