DEC
4

Board of Directors

 

 

Board of Directors is elected by the General Assembly of a company to execute the decisions of the shareholders.  Directors are responsible for their action towards not only the shareholders but also the entire spectrum of stakeholders.

Responsibilities of the Directors are defined by the commmercial code and other relevant legislation.

Good governance principles  introduce the concept of non-executive directors, who have no executive responsibilities; they are accountable also to shareholders who are not represented on the board.  The independence of  non-executive directors is what contributes to the governance quality of companies.

Presence of non-executive  directors also ensures reduction of transaction costs and hence risks not only regarding the  shareholders as a whole.  It is for his reason important that non-executive directors have a limited tenure at the respective  company.

Remuneration  of non-executive board members has been a controversial issue.  They should be given the privilege of a  sufficiently long tenure so that they can exercise their independence fully.

Practice is also that a non-executive director should not serve on more than a reasonable number boards, so that he can allocate sufficient time to perform his/her duties.