Who makes up a board of directors?
The composition and selection of a company’s board is set out in that company’s constitution. Articles within the constitution will usually stipulate a minimum and even maximum number of directors a company may have, as well as outlining any specific criteria for board qualification, where desirable.
A company board can comprise both executive directors and non-executive directors. The boards of most non-publicly traded companies comprise only executive directors, although some larger companies may also appoint non-executive directors. Publicly traded companies usually appoint non-executive directors.
Executive directors take on the running of the company and make business decisions.
Non-executive directors do not participate in the management of a company. Instead, they examine the decisions of executive directors and can debate them on company policy and strategy. Larger companies will commonly have a non-executive director serve as board Chair. Under the UK Corporate Governance Code, listed companies can also appoint a non-executive director to liaise between the board and employees.
Executive and non-executive directors all are considered to have the same powers and duties (along with the same potential personal liability).
Company directors usually make their decisions in board meetings, which normally require a minimum quorum to take place. A majority of the directors in attendance decide matters, with each director having one vote (this can be modified in a company constitution).
Directors can generally hold board meetings by telephone or video conference, as long as all the directors attending the meeting can see and hear each other.