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Disclaimer: This blog site has been prepared by Directors Australia for the purposes of providing general information only. Nothing on this blog site should be used or relied on for legal or other advice by any party. Each party's individual circumstances may change the effect and relevance of any matters discussed.
by Kerryn Newton
In my last post, How effectively does your board use committees? , I promised to provide a template board committee charter.
It’s important to establish a board committee charter because it ensures the board and committee have a clear understanding of the committee’s purpose and powers, what the board’s expects from the committee, and how the committee is to feed back to the board.
Below is a template board committee charter which may serve as a useful guide for boards establishing a board committee or board working group..
by Kerryn Newton
Board committees are often referred to as the ‘workhorses’ of the board, yet too many boards don’t make optimal use of the committee system.
In this post, I’d like to share with you the benefits of board committees and some general principles for successfully operating board committees.
Benefits of board committees
Delegating work to committees comprised of directors with appropriate skills and experience potentially allows boards to deal with a defined set of issues in a more effective and efficient way.
Committees can also provide directors with an opportunity to be more fully engaged with the work of their board and maximise the company’s benefit of their skills and experience.
Boards often establish permanent standing committees to consider issues on an on-going basis. Ad hoc committees or working groups might also be created for a specific task or project (such as a major re-development or acquisition) and therefore have a limited tenure.
The constitution of some companies permits the appointment of external (that is, independent, non-board) members to committees. This can be particularly useful where the board is seeking a skill not otherwise collectively held by the board..
by Kerryn Newton
Being an effective Chair takes skill, patience and practice. Directors Australia believes these are the 10 basics for running successful board meetings.
1 Prepare well
Prepare an effective agenda with the company secretary.
Read all board papers in advance of the meeting and identify possible issues. Ensure the papers are circulated to the board in plenty of time for them to absorb and apply critical thinking to the contents. Too many boards circulate papers too close to the meeting date.
Touch base with any sub-committee chair or other person making a presentation at the meeting to ensure they are clear as to the meeting requirements and time allocated.
Pre-empt likely questions from the board and ensure that you or management are prepared to respond to them.
Be familiar with current issues facing the company..
By Kerryn Newton
In my last post, I discussed the questions a business needs to raise before it can decide whether the time is right to establish a board of directors.
If you’ve decided the time is right, there are a couple of obvious options.
Some companies who are unsure about the step they are taking may first set up an advisory board to provide independent advice to the company on issues including business development and strategy.
This is not a decision-making entity and is not regulated under the Corporations Act, although advisory boards need to be careful that they are not in fact a governing board (because in this case the legal duties and obligations of a director might be applied).
An advisory board is often part of a transition process to a more formal, governing board with functions for risk, strategy, compliance and monitoring company performance.
Other companies create a governing board from the outset, which means the directors have legal duties and liabilities under the Corporations Act..
By Kerryn Newton
“When should we establish a board that includes independent directors?” is a question I’m often asked by SMEs, in particular family businesses.
It’s hard to give a definitive answer, as it’s important to consider each case on its own merits.
Factors including business size and stage in the business life cycle will impact on whether a board is the right choice at that time.
Here are some tips to help you work out whether a board could help your business - and to show you how to put together the best board with the skills to suit your business.
The best reason to consider a board in the first place is that a well selected group of directors can help a business deal with two major issues: growth and succession planning.
Boards help put in place the systems and appropriate checks and balances that are so important when dealing with fast growth. This can help take a business more successfully to the next level of growth..