The directors (or board of directors) of a company are responsible to the shareholders and other stakeholders for the Company being sustainable, well run and compliant with relevant laws and regulations.
The stakeholders are:
- Customers, and
The powers of the directors are determined by Company Law and the Articles of the Company.
Shareholders may have rights to determine some matters such as the appointment of the Directors, major changes in plans, acquisitions or mergers.
The Directors usually have rights set out in the Articles to delegate authorities to an individual director (i.e. the CEO or CFO) but there are likely to be certain employees or limits of authority.
The Board of a Company is responsible for the strategic direction of the company but does not directly control the day to day operations. This is normally delegated to one or more employees, who may also be directors, such as the CEO and CFO.
In smaller companies, the Directors may also hold operational roles, it is very important for Directors to understand the separation of these from their roles as Directors and to ensure that the Board when it formally meets confines itself to matters of finance, sustainability, law and strategy.
The Board may ask for reports on operational matters and give guidance to the people employed to operate the company’s business day to day but it should refrain from making decisions on matters of detail and should delegate these decisions where it feels it is appropriate.