The existence of a board of directors is essential for maintaining a company's corporate governance. He defines strategic guidelines, monitors the performance of the executive board and ensures that decisions are aligned with shareholders' interests and the sustainability of the business
According to theBrazilian Institute of Corporate Governance (IBGC), the council is the "collegiate body responsible for the decision-making process of an organization regarding its strategic direction. In addition to monitoring the management, he plays the role of guardian of the principles, values, social purpose and governance system of the organization, being its main component. However, how is the board of directors of an organization organized? This is what I will explain in this article
To begin, It is important to know that the constitution depends on the size, of the sector and the corporate structure of each institution. Meanwhile, there are good practices and basic principles that apply to almost all cases, contributing to transparency, integrity and risk reduction in management
Regarding the number of members, advisories usually have a minimum of three and a maximum of eleven counselors. In large companies, It is normal for them to be composed of multiple members. In medium-sized organizations – such as growing family industries, startupsin the process ofscale-upand companies with investment funds – they tend to be more concise, generally with up to seven members
Typical mandates last from one to three years, with the possibility of re-election of members, there should be clear rules for renewal or replacement. These should be provided for in the company's bylaws or internal regulations, including periodic performance evaluation of the board members, succession planning plan, approval of the election by shareholders through general meeting and guarantee of partial rotation, what prevents ruptures and preserves institutional knowledge
For there to be diversity within the council, it is important that members have different skills, experiences and profiles. Furthermore, the presence of independent directors, no direct link with management, it was usually quite beneficial. This is because they tend to bring a more impartial and conflict of interest-free perspective, enriching the strategic debate and contributing to more balanced decision-making
The council must have a president, responsible for leading meetings and ensuring their effectiveness. To avoid conflicts of interest, The president should not be the same as the CEOChief Executive Officer). Within the organization's structure, depending on the size of the company, support committees can exist, as audit committee, of ESGEnvironmental, Social and Governance), of finance, of strategy and people or compensation
Board meetings should occur regularly, can be monthly, bimonthly or quarterly. It is ideal that they have a defined agenda, preliminary material, registered sheets and well organized. They should have as main functions to define strategies and general guidelines of the business; approve long-term plans, budget and relevant investments; supervise the executive board, especially the CEO's performance; to strive for corporate governance and risk management; and represent the interests of the shareholders
In summary, the organization of the board of directors is a fundamental pillar for good governance of any company. Well-defined structures, qualified advisors and transparent practices directly contribute to more strategic decisions, greater credibility in the market and sustainability in the long term. By adopting good practices in the composition and functioning of the council, the organization strengthens the ability to face challenges, innovate responsibly and generate value for yourstakeholders.
