Board Meetings And Governance Flashcards
What is the purpose of the session on board meetings and governance?
To examine the composition and structure of the board and develop effective meeting procedures.
What should participants be able to consider by the end of the session?
A board’s composition, structure, and performance.
What are relevant board meeting protocols and procedures?
Including the use of committees.
What is the value of director evaluation?
Ongoing professional development.
What factors influence board composition?
- Board size
- Director tenure
- Structure of the organization
- Stage of organization’s development
- Locations of operation
- Strategies pursued
- Nature of organization (profit vs. not-for-profit)
- Type of company (family, publicly listed, Indigenous, proprietary)
What must be disclosed in governance reporting?
The composition of the board and governance structures.
What are the types of boards mentioned?
- All executive boards
- All non-executive boards
- Majority executive
- Majority non-executive
What is an advantage of all executive boards?
Can make quick decisions working together.
What is a disadvantage of all executive boards?
May lack diversity in perspectives.
What does a majority executive board include?
Some non-executive directors (NEDs) to inject external perspectives.
What is the ASXCGC recommendation for board composition?
Majority non-executive directors for ASX listed companies.
What are key actions to improve board performance and develop directors’ skills?
- Establish clear expectations
- Implement ongoing training and development
- Encourage active engagement
- Conduct regular board evaluations
- Foster a strong governance culture
- Improve decision-making processes
- Strengthen board composition
- Leverage external expertise
What is the role of the chair in a board meeting?
To link between board and organization, encourage open debate, evaluate CEO’s performance, and assist with selecting board committee members.
What should the agenda for board meetings include?
- Last meeting minutes
- Updates on action items
- Key decisions on strategy and performance
- Reports from CEO and CFO
- Proposals for Capex
- Overview of company’s progress
What is a ‘circular resolution’?
Allows decisions to be passed without a meeting by sending written documents to be signed.
What is the purpose of board meeting minutes?
To delegate authority, communicate decisions, and protect diligent directors.
What are the responsibilities of the audit committee?
- Communication with auditors
- Review of financial statements
- Management of information systems
- Efficiency of audit functions
What is the role of the risk committee?
To assess if the organization is operating within its risk appetite and monitor compliance with risks.
What challenges are there in evaluating board performance?
- Lack of clear evaluation criteria
- Conflicts of interest
- Resistance to feedback
- Limited accountability
- Engagement and participation issues
True or False: The board should become involved in the operational areas of the organization.
False
What is essential questioning for directors?
Directors have the responsibility to ask questions and challenge opinions.
Fill in the blank: Directors must have high ______ standards.
[ethical]
What must a board’s composition regularly be reviewed for?
To ensure it includes a good range of age, experience, skills, perspectives, backgrounds, ethnicities, and genders.
What should be included in a CEO’s report?
Progress report of the organization’s plans, policies, and budget.
What does a CFO’s report typically include?
- P&L
- Balance sheet
- Cash flow statement
- Variance in budget with reasons
What is a quorum in the context of board meetings?
Minimum number of directors required for a valid meeting.
What is the typical length of a board meeting?
4 hours normally sufficient.
What are the characteristics of effective directors?
- High ethical standards
- Skills and experience
- Competence in specialized area
- Sound judgement
- Willingness to challenge opinions
- Integrity
- Ability to devote required time
What should board meetings allow for?
Formal and informal proceedings, including time for free discussion.
What is the significance of diversity in a board?
A range of views and perspectives that can lead to new ideas and innovation.
What is the importance of fostering a board culture?
Encourages divergent views and open discussions.
What type of board is mandated to have specific skills as per the Aged Care Act 1996?
Majority independent non-executive directors with at least one member experienced in clinical care.
What are the key components of measuring board performance?
Peer reviews and external evaluations
These methods help identify gaps in skills and knowledge.
What should be adjusted based on performance reviews?
Board composition
Adjusting board composition can help address changing needs.
What are some ways to foster a strong governance culture?
- Implement a code of conduct
- Encourage ethical decision-making
- Promote open communication
These practices help build accountability within the board.
What are essential elements for improving decision-making processes?
- Well-structured meeting agendas
- Use of data and expert insights
- Allowing diverse perspectives
These elements help avoid groupthink.
What should be considered when strengthening board composition?
- Diverse expertise and backgrounds
- Inclusion of independent members
- Balance between seasoned and emerging leaders
A diverse board can enhance decision-making.
How can external expertise be leveraged by a board?
- Invite industry experts
- Encourage mentorship
- Benchmark against best practices
External insights can bring fresh perspectives.
What should a potential board member understand before joining?
- Insolvency risk
- Regulatory risk
- Performance risk
- Reputational risk
Understanding these risks helps assess personal liability.
What factors should be researched regarding board dynamics?
- Background and skills of current directors
- Relationships between stakeholders and management
- Potential conflicts
Awareness of these factors can prevent future issues.
What is a key consideration for directors in non-profit organizations?
Alignment with the cause of the charity
This ensures that directors are committed to the mission.
What is important during the induction process for directors?
Support preferences from new directors
Understanding how directors want to be supported can enhance their onboarding experience.
Who is responsible for promoting ongoing professional development for directors?
The Chair
The Chair must emphasize the importance of ongoing professional development.
What was a significant issue in the James Hardy case study?
The directors claimed the minutes were false
This led to their guilt for failing to act with care and diligence.
What are best practices for ensuring accurate board meeting minutes?
- Assign a competent minute-taker
- Use a standardized template
- Capture key points, not verbatim notes
- Clearly document decisions and actions
- Review and approve minutes promptly
- Ensure confidentiality and compliance
Following these practices can prevent legal issues.
What financial information is necessary when selling a business?
- Profit & Loss Statements
- Balance Sheets
- Cash Flow Statements
- Tax Returns
- Debt and Loan Agreements
- Revenue Breakdown
- Accounts Receivable & Payable
- Financial Projections
This information helps ensure a smooth transaction.
What legal documents should be prepared when selling a business?
- Business registration documents
- Contracts with suppliers and customers
- Lease agreements
- Employment contracts
- Regulatory compliance documents
- Pending or past legal disputes
These documents are crucial for a successful sale.
What operational information is important for a business sale?
- Organizational structure
- Standard operating procedures
- Customer and supplier contracts
- Technology assets
- Inventory and asset lists
This information provides insight into the business’s operational health.
What should be included in the market and competitive position analysis?
- Market analysis
- Customer demographics
- Competitor analysis
Understanding these factors helps position the business effectively.
What is a key consideration for the owner’s role post-sale?
Consulting or transition support
Defining this role can ease the transition for the new owner.
What is essential for employee retention during a business transition?
An employee retention plan
This plan helps maintain stability during the sale process.
