What is a board of directors and what is its role?

Corporate governance is based on solid structures. Among them, the board of directors occupies a central place. This decision-making body acts in support of management while ensuring compliance with the main guidelines. He plays an essential role in the strategy, control and management of companies by formalizing his decisions during meetings organized in Boardroom.

But how does this governance body actually work? What is its composition and what are its members for? Understanding how consulting works means better understanding the internal mechanisms of the company. Indeed, the administration is a body that is both decision-making and collective, whose role is at the very heart of corporate governance.

What is a board of directors?

The board of directors is a very important body in business life. It is responsible for defining the main strategic guidelines and for ensuring their implementation. According to the Commercial code, it is a collegial body that meets in board of directors meeting, whose mission is to control and supervise the management of the company, without intervening in daily operations.

It mainly concerns structures adopting the form of public limited company because it is mandatory in this type of structure, unless the SA adopts a management board and a supervisory board (dual structure). It may also exist in some associations, public institutions or simplified joint stock company (SAS). When a business is administered by a council, the latter acts within the framework set by statutes, in connection with general meetings and executive management.

It should not be confused with other governance bodies. La Directorate-General implements decisions, while the Management board can replace the meeting of the board of directors in companies with a dual structure. Finally, the supervisory board ensures permanent control of the management board, but does not take part in management decisions. The board of directors, on the other hand, combines strategic control and decision-making power.

What is the composition of the board of directors?

In a limited company, the Composition of this governance body includes between 3 and 18 directors, a president mandatory natural person, and sometimes a managing director. Businesses with more than 1,000 employees must also incorporate directors representing employees. But who is on the board of directors? Here are the main categories of members.

The chairman of the board of directors

The President directs the work of the Council, organizes meetings and ensures the regularity of the deliberations. It guarantees the proper functioning of the governance body. It must be a natural person and respect a age limit, generally fixed at age 65, unless otherwise provided in the statutes. If combined with the position of managing director, he becomes president and chief executive officer (CEO).

Internal directors: members of management or shareholder representatives

These directors come directly from the company or from the main shareholders. Their presence makes it possible to relay strategic choices to operational teams and to ensure coherence between the vision of the council and the realities on the ground.

External directors: profiles independent of the organization

Without a contractual relationship with the company, these members of the board of directors are chosen for their specific expertise (legal, financial, sectoral...). They provide a fresh perspective and an essential perspective to inform strategic decisions.

Independent directors: guarantors of impartiality

Having no capital or professional links with the company, independent directors are necessary in the neutrality of debates. Their presence is often required on audit, governance or compensation committees.

Directors representing employees

In large companies, employees elect one or two representatives to sit on the board. These directors participate actively in decisions, in particular on social, HR or organizational issues, by ensuring the direct representation of employees.

Members associated with strategic committees

Some councils call on external experts from time to time via dedicated committees. Although they do not sit at every meeting, these specialized profiles work on long-term topics such as innovation, ecological transition or financial strategy.

La appointment of directors is carried out according to the rules provided for in the articles of association, during the general meeting of shareholders. Mandates generally last between three and six years, with the possibility of renewal.

Each member of the board of directors contributes, at its level, to the definition of the company's orientations. A good balance between internal, independent and expert profiles reinforces the solidity and legitimacy of governance.

What are the missions of directors?

The responsibilities of the board of directors cover all the strategic, financial and organizational challenges of the company. This governance body plays a supervisory, decision-making and control role, without interfering in day-to-day operational management.

The main missions of the board of directors

The main responsibilities of the Board of Directors are:

• Define strategic directions of the company, in terms of development, investments, alliances or structuring;
• Oversee day-to-day management, verifying the coherence between the actions carried out by management and the approved decisions;
• Track key indicators performance and management (financial, social, environmental, etc.);
• Evaluate major risks, in particular legal, financial, operational or reputational, and ensure their control;
• Control the execution of decisions by senior management, without substituting executive functions;
• Representing the interests of shareholders and other stakeholders by ensuring balanced and prudent governance.

Each member of the board of directors Assume a collective responsibility, which may incur civil and even criminal liability in the event of a serious breach of its management obligations.

Examples of strategic decisions taken by the board of directors

Some decisions fall under compulsorily of the board of directors, in accordance with the legal provisions applicable to public limited companies. These include:

• The appointment or dismissal of the director general and, where appropriate, deputy managing directors ;
• The Convocation of the general meeting and the closing of the annual accounts;
• Thepreparation of the management report to be submitted to shareholders;
• The definition of strategic directions of the company, which the management then implements under its control.

These decisions are debated at the meeting, formalized by resolutions and recorded in the minutes of the council. They involve the collective responsibility of directors.

What are the legal obligations of the board of directors?

The board of directors acts within a strict legal framework. Each director hires his civil liability in case of management error, and may also be affected by a criminal liability, especially in the event of a serious breach of its obligations.

Respect for the principles of confidentiality, of Loyalty And of declaration of conflicts of interest is mandatory. The law also imposes financial transparency obligations. The board should:

• Stop social accounts, which reflect the financial position of the company at the end of the financial year;
• Validate the management report, which presents the results, risks, and prospects of the business;
• Send these documents to the auditors, responsible for certifying them;
• Informing shareholders prior to the general meeting, by ensuring clear access to preparatory documents.

The holding of council meetings, called deliberations, must comply with the quorum and convening conditions provided for by law and statutes. These modalities are detailed in the rules of procedure of the council, which oversees its daily functioning.

How does a board of directors work?

The functioning of a board of directors is based on precise rules, regulated by law and statutes. Each director is committed to sit on the board on a regular and active basis.

Les Council meetings must stand at least once per quarter in public limited companies, in accordance with article L225-17 of the Commercial Code. In fact, some companies meet their advice more frequently, depending on the activity or strategic news.

Each session is carefully prepared. It includes:

• One summoning sent by the president or secretary of the board;
• One agenda clear, established in advance;
• The transmission of working papers necessary for the deliberations.

The board makes its decisions collectively. These are formalized in a Minutes, signed by the members present and kept in the legal registers. The follow-up of resolutions adopted is provided between meetings, sometimes through specialized committees.

The remuneration of directors is often in the form of Attendance tokens. These amounts, considered to be income from movable capital, depend on attendance at meetings and the level of involvement in the work.

What are the communication and logistics challenges?

The proper functioning of the council depends on a clear organization and a smooth flow of information. It is therefore necessary to:

• Effectively prepare for council meetings: every summoning must be sent on time, with a agenda accurate and the necessary documents. This rigor conditions the quality of exchanges.
• Encourage easy access to information: the use ofcollaborative tools allows members to access the supports in advance and to consult them remotely. It reinforces the transparency and responsiveness of the board.
• Coordinate with management and committees: the managing director of the company And the executive committee contribute to the preparation of topics. The council must rely on these actors to inform decisions.
• Adapting the organization to modern constraints: the format of meetings is evolving (face-to-face, videoconference, or hybrid). Convene the ordinary general meeting can now be kept remotely, if the statutes allow it.
• Maintaining a structured framework: the regular wear of Council meetings, the monitoring of decisions and the good daily management of exchanges contribute to the overall effectiveness of the governance body.

Faced with its various challenges, organizing board meetings in an adapted and professional high-end space makes it possible to establish an effective and structured working climate.

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Conclusion

The role of the board of directors is to structure key decisions, supervise management and ensure the collective interest. To fill out this responsibility, it is based on a rigorous organization, reliable information and the mobilization of varied skills, in particular thanks to the presence of independent members And of specialized committees.

In a context of continuous transformation, councils must integrate the requirements of a responsible governance, more diversified, agile and transparent.

Therefore, organize the board of directors meetings is not limited to a simple formal requirement. These highlights should provide a secure, structured and conducive environment for decision-making. Space, confidentiality, logistics, coordination of documents: every detail counts to guarantee the effectiveness and credibility of the governance body.