CHAPTER 1

Understanding Boards

The board of directors, whether for-profit or nonprofit, oversees the activities of a company and represents its shareholders. The board is directly accountable to the shareholders. Each year the company will hold an annual general meeting (AGM) where the directors report to shareholders on the performance of the company, its future, and its strategies; they may also submit themselves for reelection to the board at the AGM.

Public companies must have a board of directors. Private companies are not required to have boards, although many of them do.

The board of directors’ key purpose is to ensure the company’s long-term prosperity. Oversight of management, including the hiring, evaluation, and dismissal of the chief ...

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