By Atty. Jun de Zuñiga
The board of directors is the heart, body and soul of every corporation because it is only through the board that the corporation can act and express itself. It is the governing body for the conduct of corporate business and operations, and the stockholders can only act through their elected board. While the stockholders own the corporation, the exclusive authority to manage and control the same is by law vested on its board of directors.
The board represents the varied interests of the stockholders which can possibly lead to differences in position in the course of board deliberations. However, the board directors should also realize that they have a common objective in optimizing shareholder value and in achieving the company’s vision and mission. Thus, it is essential that the board should function harmoniously, smoothly and efficiently and, as much as possible, avoid conflicts that can be detrimental to the interest of the corporation. Towards this end, it would be ideal for the board to be a gentlemen’s forum serving as an effective sounding board of ideas but with a commonality of purpose.
To start with, the board can adopt a board protocol to guide the norm of conduct and behavior during board meetings. The board protocol can embody simple good governance principles which I am sure that most directors are aware of but which can still effectively serve as reminder to them as they discharge their functions in the board.
By way of example, I am enumerating below ten (10) governance principles which can be applied in general to corporate boards. However, corporate boards can adopt their own principles and protocol.
- The primary duty of every director is to the corporation and he or she is expected to act always in the best interest of the corporation.
- The directors shall observe high standards of courtesy and ethical conduct in the course of their deliberations. The focus shall be on the issues.
- The directors shall observe punctuality in attending board meetings and shall be considerate of the schedule of the other directors.
- Every director is expected to take a position and vote on issues presented to the board. Although there may be differences in views, there shall be mutual respect among the directors for divergent opinions.
- The board shall endeavor to have a common decision on matters presented to it. Once a majority decision is reached, that decision should also be respected.
- If a director has a personal or pecuniary interest or conflict of interest in any matter in the board agenda, he or she should make a disclosure to the board and excuse himself or herself from participating in that issue.
- Confidentiality of the board proceedings and documents shall be upheld, except in instances where disclosure is allowed or required.
- The directors shall study diligently the matters in the agenda beforehand for their active participation and, if necessary, can request for additional information from Management through the appropriate officers.
- The directors shall promote decisions that are fair and equitable and compliant with laws and regulations.
- The directors shall endeavor to develop an annual program for self-improvement and self-rating following the standards of good governance.
The above comments are the personal views of the writer. His email address is firstname.lastname@example.org