By: Mohamed Sanih, Gn. Fuvamulah, Maldives
What is the Role of the Chairman in an Organization?
There should be a clear division of control between both executive and non-executive directors at the board level. And no particular set of individuals should dominate or exercise power over the other group.
The Chairman should provide leadership to the board and there should be a clear cut division of responsibilities & duties between the CEO and the chairman.
The UK Corporate Governance Code, recommends that a clear division should be established between the position of the Chief Executive Officer (CEO) and the Chairman.
Chairman is the person charged with providing leadership to the Board and utilize the talents contributed by the Board members.
Best corporate governance practices suggests that the chairman should be an non-executive independent director and also should not be the CEO of the organization.
Chairman lends a balance to the Board by being it's independent head while the CEO is often the person to be involved directly in the operations & execution plans of the company.
An independent chairman is very important to the successful implementation of good corporate governance practices at the board of directors level.
To be an successful independent chairman international corporate governance practices states that the chairman should not have worked previously as the CEO of the organization.
The role of the Chairman can be defined best by the synonym (RAISE DIP) for the ACCA P1 Paper: Governance, Risk and Ethics.
There should be a clear division of control between both executive and non-executive directors at the board level. And no particular set of individuals should dominate or exercise power over the other group.
The Chairman should provide leadership to the board and there should be a clear cut division of responsibilities & duties between the CEO and the chairman.
The UK Corporate Governance Code, recommends that a clear division should be established between the position of the Chief Executive Officer (CEO) and the Chairman.
Chairman is the person charged with providing leadership to the Board and utilize the talents contributed by the Board members.
Best corporate governance practices suggests that the chairman should be an non-executive independent director and also should not be the CEO of the organization.
Chairman lends a balance to the Board by being it's independent head while the CEO is often the person to be involved directly in the operations & execution plans of the company.
An independent chairman is very important to the successful implementation of good corporate governance practices at the board of directors level.
To be an successful independent chairman international corporate governance practices states that the chairman should not have worked previously as the CEO of the organization.
The role of the Chairman can be defined best by the synonym (RAISE DIP) for the ACCA P1 Paper: Governance, Risk and Ethics.
The best description can be found in Derek Higgs Report and they can be summarized as follows:
R: Run or leadership of the board and effectiveness of the board to set their roles and agenda.
A: Accurate, timely and clear information to the Board of Directors.
I: Information facilitating & contribution of the non-executive directors.
S: Self sufficiency in performing complex and difficult decisions.
E: Effective communication between executive and non-exectuive directors (NEDS) and also with the shareholders.
D: Develop and process the needs of both executive and non-exectuive directors.
I: Induction and training programs for the Board of Directors.
P: Performance evaluation of the Directors.
S: Self sufficiency in performing complex and difficult decisions.
E: Effective communication between executive and non-exectuive directors (NEDS) and also with the shareholders.
D: Develop and process the needs of both executive and non-exectuive directors.
I: Induction and training programs for the Board of Directors.
P: Performance evaluation of the Directors.
I am keeping this article short as this will be the first in a series to come in the future.
Source:
Please, note of the below:
In April 2002 Derek Higgs was appointed to lead an independent review of the role and effectiveness of non-executive directors. Derek Higgs published his report on 20th January 2003. The FRC published good practice suggestions from the report in June 2006; this guidance has since been withdrawn and replaced by the FRC Guidance on Board Effectiveness.
http://www.icaew.com/en/library/subject-gateways/corporate-governance/codes-and-reports/higgs-report
Sources on Corporate Governance:
https://www.frc.org.uk/Our-Work/Codes-Standards/Corporate-governance/UK-Corporate-Governance-Code.aspx
https://en.wikipedia.org/wiki/Corporate_governance
http://guides.library.harvard.edu/c.php?g=309897&p=2070088
http://ec.europa.eu/justice/civil/company-law/corporate-governance/index_en.htm
http://www.oecd.org/corporate/principles-corporate-governance.htm
https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act
https://www2.deloitte.com/content/dam/Deloitte/za/Documents/governance-risk-compliance/ZA_TheRoleOfTheChairmanAsWellAsValueOfANonExecutiveChairman_04042014.pdf
https://www.frc.org.uk/Our-Work/Codes-Standards/Corporate-governance/UK-Corporate-Governance-Code.aspx
https://en.wikipedia.org/wiki/Corporate_governance
http://guides.library.harvard.edu/c.php?g=309897&p=2070088
http://ec.europa.eu/justice/civil/company-law/corporate-governance/index_en.htm
http://www.oecd.org/corporate/principles-corporate-governance.htm
https://en.wikipedia.org/wiki/Sarbanes%E2%80%93Oxley_Act
https://www2.deloitte.com/content/dam/Deloitte/za/Documents/governance-risk-compliance/ZA_TheRoleOfTheChairmanAsWellAsValueOfANonExecutiveChairman_04042014.pdf
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