The Board of Directors

The Board of Directors

What is a director's role, who are they and how often do they change?

By Emma Meakin

The company board of directors includes the people with day-to-day control of the company. In some cases, the board can also be the company shareholders. The directors can be appointed to their role by the shareholders and will be the top-level of management in the company and the staff will ultimately answer to them.

What’s the role of the board?

The role of the board of directors is to determine the overall strategic direction of the business, including its core goals. They are responsible for establishing effective governance policies, protecting the business’ assets and organizing an annual audit.

The board is also responsible for hiring the CEO or general manager, finding the best candidate for the role and deciding on appropriate remuneration and benefits. The board will work closely with the CEO to achieve the core business aims. In turn, the CEO’s role is to hire other staff and to oversee the day-to-day management of the business.

How often should there be changes to the board of directors?

While there’s no legal limit for how long a director can serve on a board, it’s important for boards to evolve with the business and the market. They should therefore make it best practice to recruit new directors on a regular basis. When the business initially began there may have only been a sole director in place. However as the company grows there is normally a necessity for the appointment of more, such as the financial director, technical director, HR director and any other directors the company may feel is necessary.

A company can seek to limit the time a director can serve on the board - 3 or 4-year limits are the norm. If your directors are elected onto the board by shareholders, it’s also best practice to set a limit on how many times one director can be elected, twice is generally the norm here. Ultimately, the share holders are the ones with the authority to appoint and remove the directors of a company.