The board’s structure

The board’s structure is often determined in an organization’s constitution or a shareholders’ agreement, a legal document executed by all the parties who have a stake in the company. There are also board charters describing the firm’s governance. Good governance rules would recommend that a minimum number of independent directors also be appointed to the board to provide different perspectives, including directors who have a range of experiences in a particular subject.

Usually, the board creates different committees to evaluate specific decisions. To operate more efficiently and leverage its resources, the board could gather some of its members with particular expertise into a committee that addresses technical matters and provides points of view to the whole board to facilitate a decision. Depending on the industry, the following committees might be formed: an audit and risk committee, a regulatory committee, a remuneration...