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Board Governance

for the rest of us non-lawyers
by
Rick Sutcliffe

Disclaimer: The contents of these pages are offered as general principles, but not as legal opinions. Statutory law and entity policy on board structure, lines of authority and board discipline vary widely. Some of the comments here may not be applicable, or may be wrong in some situations, depending on the regulatory and organizational environment. When in doubt consult competent legal counsel. See the further disclaimer at the end.


Definitions and basic concepts for board governance are on the starting page.

Accountability

Fiduciaries are stewards of resources that belong in whole or part to others. They are bound by the principles discussed here and by the organizing documents, mission, vision, goals, policies,and procedures of the entity they direct. Not only may they not do as they please, they must regularly give account to others on their stewardship, or else be stewards no longer. Such giving account is generally done through specified and regulated reporting channels, such as the president's regular reports to the board on goal fulfillment, and the board's reports to the stakeholders on the health of the organization as a whole.


Directors are accountable to:

  • beneficial owners of the entity, either shareholders or members (report at AGM),
  • employees and volunteers (for wages, benefits, payroll taxes, employment and working standards, etc.),
  • their own code of ethics,
  • their chair for orderly conduct at meetings,
  • all authorities and bodies holding legal jurisdiction over the entity,
  • common and statute law on fiduciary and other duties,
  • (to a greater or lesser extent) the general public (depends on the nature of the organization).
  • other stakeholders such as depositors, bond holders, parent or subsidiary organizations, etc.
  • if a faith-based organization, to the common statement of faith (and if relevant, of community standards).

The chair (CEO) is accountable to

all the above plus the board as a whole.


The president (COO) is accountable to

the board as a whole, but not to any one director.


All other staff are accountable to

their direct supervisor and up the chain of authority to the president, but not directly to the board or any one director.


Go back to the starting page.


Last updated 2013 02 06
An Arjay Enterprises Site.