The Role of a Company Director

The role of effective and high performing boards and directors encompasses eight broad areas...

The role of a company director is essentially laid out across three key documents – the Corporations Act 2001 (Cth); the ASX Corporate Governance Principles and Recommendations (2010); and the Standard Australia Good Governance Principles (AS 8000-2003; 2003).

Although most of the recommendations and guidelines contained with the ASX principles and recommendations apply to listed organisations, businesses of all shapes and size can benefit from adopting the approach to corporate governance suggested.

Adopting these recommendations and guidelines as a best practice approach, along with additional requirements that vary from business to business, translates to the role of effective and high performing boards and directors encompassing eight broad areas.


You are expected to provide input into, set, and approve the organisation’s goals and objectives. Personally, you will be looked upon to offer input and insights from the perspective of your expertise.

The board must also ensure that appropriate resources are made available to successfully achieve the strategic plan.


CEO and Senior Management

Overseeing the succession planning, remuneration, appointment, mentoring, assessment, and dismissal of the Chief Executive Officer (or equivalent position). The board also approves the appointment, removal, terms, conditions, and remuneration of senior executives (for example, Chief Financial Officer, Company Secretary, etc.).


Monitoring / Approval

These tasks include monitoring and approving strategy implementation, budgets, KPIs, capital expenditure, capital management, mergers, acquisitions, divestitures, organisational performance, control and accountability systems, senior management’s performance, the effectiveness of the entity’s governance practices, diversity policy, and overseeing the integrity of the entity’s accounting and corporate reporting systems, including the external audit.



Compliance activities include ensuring ongoing legal compliance, providing overview of policies and practices, and the timely and balanced disclosure of all material information concerning the entity to shareholders and stakeholders.


Risk Management

Ensuring risks are identified, assessed, and managed, and that necessary policies are created to mitigate risks falls under this category of board and director duties. Risk management also involves ensuring that the entity has in place an appropriate risk management framework, setting the risk appetite within which the board expects management to operate, and reviewing the entity’s risk management framework at least annually to satisfy itself that it continues to be sound.


Communications / Networking

Directors are tasked with liaising with key stakeholders and shareholders, comply with its continuous disclosure obligations, and design and implement an investor / stakeholder relations program to facilitate effective two-way communication with investors / stakeholders (if deemed necessary).  In not-for-profits (NFPs) and charities, board members are usually charged with assisting the organisation’s fund-raising activities and government and business relations.


Culture / Ethics

Boards must foster appropriate corporate culture, and develop a code of conduct for its directors, senior executives and employees to ensure an honest and ethical workplace.


Board Performance and Structure

Being self-managed, the board must adopt a structure to facilitate effective governance processes, and for each director to contribute effectively; oversee director remuneration; appoint the Chair and Deputy Chair; periodically evaluating the performance of the board, its committees and individual directors; develop the board charter; develop and implement recruitment, induction and continuing professional development programs for directors; and manage director conflicts of interest.


As you can see, the role of a company director is quite broad, and involves a lot of critical activities for the organisation. The role of a director varies only in a matter of degrees across different organisation types; and all directors must approach their board duties with their legal duties in mind: to act in good faith; to not gain advantage by improper use of their position; not to misuse information; to act with care and diligence in the performance of these duties, and not to trade while insolvent.

From your experience, what would you add to this list?

For more tips on being an effective company director, check out this post.

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February 12, 2015

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What is Get on Board?

Get on Board delivers education and development courses that are open to individuals from all professional backgrounds and all types of industries (public, private, NFP, sporting organisations and clubs, etc.). Get on Board focuses on aspiring directors – those people looking to join a board in the near future – and on new directors – those who are currently in their first to fifth year of sitting on a board. Everything that we do is geared towards developing the corporate governance skills, and the business, strategic and financial acumen of new and aspiring company directors.


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