What are the main responsibilities of the board?

Answer 1

A corporation's board of directors is elected by its shareholders. The main responsibility of an American corporation's board of directors is the conduct of the corporation's business in a way that will increase shareholder wealth. The directors, however, do not personally manage the corporation's day-to-day operations; instead, they delegate that duty to the corporate officers that the directors appoint. The board also has the power to declare dividends and to make major corporate decisions. Some of these decisions acquire approval by shareholders. The board should also have an Audit Committee to oversee and approve outside accounting services offered by public accounting firms. Since the Sarbanes-Oxley Act was passed in 2002 after the accounting fraud scandals associated with Enron and other big companies, both directors and chief officers of publicly traded companies are now required to have place a system of internal control and to report to the Securities Exchange Commission regarding the effectiveness of the system in preventing misstatement of financial information. They must report any change in the system. In addition, they must report on the effectiveness of the company's control over financial reporting and that report is now a required part of the annual audited financial reports required of all publicly traded U.S. corporations.