Role of the Chairman

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Roles of the chairman in corporate governance

Roles and Responsibilities

  1. Provide leadership to the board

    The chairman is responsible for ensuring the board’s effectiveness for shareholders, by setting the agenda and ensuring meetings occur regularly

  2. The chairman represents the company to investors and other outside stakeholders/constituents.

  3. Effective communication with shareholders

    The ‘public face’ of the organisation So, the chairman’s roles include communication with shareholders. 

    This occurs in a statutory sense in the annual report and at annual and extraordinary general meetings.

  4. Finally, the co-ordinating of NEDs and facilitating good relationships between them and executives

  5. Ensuring the board receives accurate and timely information

Benefits of separation of roles of Chair & CEO

  1. Frees up the chief executive to fully concentrate on the management of the organisation

  2. Allows chair to represent shareholders’ interests

  3. Removes the risks of ‘unfettered powers’ in one individual

  4. Reduces the risk of a conflict of interest in a single person being responsible for company performance whilst also reporting on that performance to markets

  5. Chairman provides a conduit for the concerns of non-executive directors

  6. Ensures the CEO is responsible to someone named directly

  7. Agrees with most best practice codes

Importance of the chairman’s statement

  • An important and usually voluntary item, typically at the very beginning of an annual report.

  • Conveys important strategic messages

  • Allows chairman to inform shareholders about issues Legal rights and responsibilities of Directors  (Breach of responsibility can leave director open to criminal prosecution)

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