The Concept of Board of Directors for a Company

By | January 15, 2008

Any company or a formal organization, the director is an officer who charged with the conduct and management of its affairs. A director may be an inside director or an outside, or independent, director. Inside director means a director who is also an officer or promoter or both. The group directors are called to a board of directors. These groups have the powers to appoint the chairperson of the board of directors generally we called as chairman or chairwoman. Generally the control of a company is divided between two bodies first one is the board of directors, and the shareholders in general meeting. The amounts of powers are different from company to company. Generally in small private companies, the directors and the shareholders will normally be the same people, and thus there is no real division of power. In large public companies, the board tends to exercise more of a supervisory role, and individual responsibility and management tends to be delegated downward to individual professional executive directors who deal with particular areas of the company’s affairs. Another main feature of boards of directors in large public companies is that the board tends to have more de facto power. Between the practice of institutional shareholders granting proxies to the board to vote their shares at general meetings and the large numbers of shareholders involved, the board can comprise a voting community that is hard to overcome. However, there have been moves recently to try to increase shareholder activism amongst both institutional investors and individuals with small shareholdings.

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