A board charter is a policy document that clearly defines the respective roles, responsibilities and authorities of the board of directors (both individually and collectively) and management in setting the direction, the management and the control of the organisation.

The Board Charter provides a concise overview of the role and responsibilities of the board of directors; powers of the board and board committees; separation of roles between the Board and Management; and the practice of the board in respect of corporate governance matters.

BENEFITS OF A BOARD CHARTER

1. Assists the company’s leadership in delivering good governance.
2. Documents the policies that the board has decided upon to meet its legal and other responsibilities.
3. Serves as a reminder for the board of the legal framework within which it operates.
4. It is a point of reference for disputes.
5. Serves as an induction tool for new board members, directors and senior managers.
6. Greatly assists in establishing effective operating procedures for a board.
7. Develops of a shared understanding of the board’s role throughout the organisation.

COMPONENTS OF A BOARD CHARTER

1. Statement of Purpose and objective
2. Board powers and Governance Structure
3. Board Composition- The size of the board, diverse mix of skills and expertise critical for effective oversight on the management of the company
4. Board Meetings and procedures to be followed during the meeting.
5. Appointment and remunerations of board members
6. Resignation, Removal or Vacation of office by a director
7. Roles of the Chairperson, Deputy vice-chairperson, CEO, Managing director and company secretary of the company.
8. Succession planning
9. Board Committees eg Audit Committee, Risk Committee, Board Nomination, Evaluation & Remuneration Committee etc.
10. Board Evaluations and performance
11. Board Relationships with the shareholders
12. Board inductions and training
13. Code of conduct and liability of directors
14. Governance Audit
15. Review and Access to the board charter

FUNCTIONS OF THE BOARD OF DIRECTORS.

1. The Board is the ultimate decision-making body of the Company.
2. The Board is responsible for establishing a sound system of internal control for the Company.
3. The Board is responsible for overseeing the corporate governance framework.
4. The Board is responsible for: adoption of strategic plans and policies; monitoring the operational performance; establishing policies and processes that ensure the integrity of the Company’s internal controls; and risk management.
5. The Board is responsible for establishing clear roles and responsibilities in discharging its fiduciary and leadership functions.
6. The Board is responsible for ensuring that management actively cultivates a culture of ethical conduct and sets the values to which the institution will adhere.
7. The Board is responsible for ensuring that the strategies adopted to promote the sustainability of the company.
8. The Board is responsible for establishing policies and procedures for effective operations of the Company.
9. The Board is responsible for establishing appropriate staffing and remuneration policies for all employees as required.
10. The Board shall ensure the Company’s compliance with all applicable laws, regulations, governance codes, guidelines and regulations and establish systems to effectively monitor and control compliance across the Company.

HOW WE CAN HELP

As Imperial Registrars we shall be pleased to assist your company in developing a board charter for the effective functioning of your board. Kindly get in touch with us for further assistance on the above. (Info@imperialregistrars.co.ke)