The paper "Role of Directors in Corporate Governance" is a great example of a report on human resources. It may be commonly perceived that non-executive directors are a waste of time. It may also be perceived that such directors often have little involvement with a company and are not aware of what is really going on and that their role would rather be left with the executive directors. This may have been true in the past and with regard to private companies. For instance, the great majority of private limited companies in the United Kingdom have not in past selected non-executive directors to their boards (Ince & Company International Law Firm, 2008).
It was generally considered that non-executive directors were appropriate only for publicly quoted companies and bigger private companies. Indeed, very few papers were written in support of small enterprises having non-executive directors (Berry & Perren, 2001). But the trend has changed in recent years, as more and more medium-size and bigger private companies have been appointing non-executive directors. There are many reasons for these appointments and as such, this paper takes a position against the notion that non-executive directors are a waste of time.
As it will be shown in the paper, non-executive directors indeed have a great role to play in matters that pertain to the success of the company. The review is based on an analysis of agency, stewardship, stakeholders, and resource dependence view of directors’ roles and responsibilities. Role of directors in corporate governanceGovernance of companies is viewed to be the responsibility of the board of directors who set the company’ s strategy, monitor managers, and report to shareholders on their stewardship.
In fact, it is against a backdrop of the roles of the board of directors that the Committee on the Financial Aspects of Corporate Governance (1992) in the United Kingdom defined corporate governance as “ … the system by which companies are directed and controlled” (Smith, 2007, p. 807). The fundamental legal duties of directors are to act in good faith with respect to the interests of the company and for an appropriate purpose. Company directors are also expected to exercise care and skill in the management of the affairs of the company.
These functions are derived from common law and apply to all directors.
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