What is the difference between board of directors and executive committee

Show all. Key Sources of Corporate Governance Regardless of the size, age or profitability of a private company, it is important to be aware of — and adhere to — the applicable rules and regulations. Different rules apply depending on whether the company is public or private and the size and turnover of the company.

To this end — in certain instances the Act restricts directors from taking certain decisions without shareholder approval; and the MOI of a company can also include certain restrictions on directors. Conclusion If an executive committee heads up the operations of your company, you may want to look into whether it has been correctly established by the board of directors and functions, in all respects, as a subsidiary body to the board.

Shaylyn McDonald Shaylyn has an LLB cum laude from Wits and was admitted as an attorney in after having completed her articles at Werksmans where she rose to the level of senior associate. Due to the litigious nature of our society, boards are taking a stronger interest in day-to-day management activities because of the ensuing impact on its fiduciary responsibilities.

Boards need to be informed of how the organization is being managed to protect its legal responsibilities, but the board role should not cross over into performing management duties. Here are some of the basic responsibilities for boards and management:. Duties of boards include:. The duties of management include:. Boards function best when they focus on higher-level, future-oriented issues; but there are times that they need to get more intrinsically involved.

Following are some benchmarks for boards to better understand when a situation requires taking action:. Boards should take a stronger role on big matters. This means matters that may have a negative impact on the organization or with regard to matters that have strong financial stakes. It means that they should be informed about issues so that they can make appropriate decisions. Boards should focus on the long-term vision. They do this by forecasting how the organization will look up to five years in the future.

Boards should limit their involvement to quality, growth, finances, and people. Financial institutions are also mandated to have a committee to address risk. Companies may have other committees of the board to specialize in such matters as technology; risk identification and management; safety and security; environmental issues; human capital; and other subject areas. In addition, some companies have created an executive committee to address matters that may need monitoring and attention between regularly scheduled board meetings.

The roles of such executive committees can vary among companies and with changing circumstances within a company. One company describes its executive committee in its annual report as follows:. The Committee shall meet as and when any member of the Committee deems necessary or desirable, subject to notice or waiver of notice being given in accordance with the rules and procedures of the Committee.

Charters for executive committees may also describe specific limitations on committee activities. First, an executive committee can be a flexible resource to monitor a wide range of developments on a continuous basis.

Without a necessity for periodic meetings requiring scheduling or travel, and with good use of technology, such a group can be nimble in staying abreast of internal and external developments affecting the business and can act whenever such matters arise.

Kerie Kerstetter March 1, It also functions as a steering committee , making high-level strategic decisions. It may be called on to manage serious high-level workplace matters, provide organisational oversight and assist with board development. Size : executive committees are small by design; their function is to arrive at decisions quickly. To that end, most committees range in size from three to seven members.