Directors have an enormous amount of responsibility within a business. Often a large company will have a Board of Directors, which is a group of people elected to head the company or organisation, often by the shareholders. Directors are the highest power of authority within a company or business and are generally lead by the Chief Executive Officer or CEO. As well as making decisions in regards to the direction of the business they can even be held liable if a business runs into financial difficulty and even receive a Director penalty notice.

Govern

The Board of Directors is responsible for governing the organisation and establishing any policies and procedures of the company. They make decisions that affect the employees of the company, and importantly, also decisions that affect the shareholders. The board makes these decisions on a shareholders behalf, which is why the shareholders have a say in voting for the Board of Directors of a major company. The board needs to be chosen careful because a relatively small number of people is held responsible for important decisions, which can have enormous corporate and economic impact on the company.

Chief Executive Officer

The Chief Executive Officer, or CEO, is selected by the Board of Directors. It is usual for this decision to be made through a vote. Once the CEO is appointed the Board of Directors will support them and review their performance. The CEO is the face of the company and will find they may have to deal with the media and attend lots of meetings. The CEO is also the Chairman of the Board and will preside over meetings.

Finances

The Directors are responsible for making sure that there is adequate financial resources to effectively run the company, pay employees and ensure continual development within the company.

They decide on the delegation of funds within the company, and as a group determine how the companies profits will be used. The companies annual budget is a part of their responsibilities. A proportion of profits go to shareholders, but money does go back into a company to ensure continual growth, and what areas this money targets is a decision that is left to the Board of Directors. The Board of Directors will also set their own salaries, which can be one of the areas that can be quite controversial.

Company performance

The Directors are responsible for reporting to shareholders that performance of the company. Effectively the directors work for the shareholders, as they are all part owners of the company, no matter how small their percentage of ownership. Often a large percent of a company is owned by one particular person or group of people, with only a smaller amount of the company being available to the general public. These types of decisions are left up to the Board of Directors.

Legal responsibilities

Depending on the nature of the organisation the legal responsibilities of the Board of Directors will vary. Their legal responsibilities will also depend on the jurisdiction the company operates within. A public company will be subjected to a lot more complex and thorough responsibilities than a private company.

By the way, do you want to learn more about Business Finance? If so, I suggest you check voluntary liquidation and liquidation.

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