This is such a great summary of the duties of the board of directors from three attorneys at Sidley Austin LLP – Claire H. Holland, Holly J.Gregory and Rebecca Grapsas:

Responsibilities of the board (supervisory)

Board’s legal responsibilities

What are the board’s primary legal responsibilities?

The primary legal responsibility of the board is to direct the business and affairs of the corporation (see DGCL, section 141). While the functions of a board are not specified by statute, it is generally understood, as noted in the ALI’s Principles of Corporate Governance and other codes of best practice, that board functions typically include:

• selecting, evaluating, fixing the compensation of and, where appropriate, replacing the CEO and other members of senior management;
• developing, approving and implementing succession plans for the CEO and senior executives;
• overseeing management to ensure that the corporation’s business is being run properly;
• reviewing and, where appropriate, approving the corporation’s financial objectives and major corporate plans, strategies and actions;
• understanding the corporation’s risk profile and reviewing and overseeing the corporation’s management of risks;
• reviewing and approving major changes in the auditing and accounting principles and practices to be used in preparing the corporation’s financial statements;
• establishing and monitoring effective systems for receiving and reporting information about the corporation’s compliance with its legal and ethical obligations, and articulating expectations and standards related to corporate culture and the ‘tone at the top’;
• understanding the corporation’s financial statements and monitoring the adequacy of its financial and other internal controls, as well as its disclosure controls and procedures;
• evaluating and approving major transactions such as mergers, acquisitions, significant expenditures and the disposition of major assets;
• providing advice and counsel to senior management;
• reviewing the process for providing adequate and timely financial and operational information to management, directors and shareholders;
• establishing the composition of the board and its committees, board succession planning and determining governance practices;
• retaining independent advisers to assist the board and committees;
• assessing the effectiveness of the board, its committees or individual directors; and
• performing such other functions as are necessary.

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