A board of directors oversees a corporation and makes the decisions assigned to it by law and the company's governing documents.
Definition
A board of directors is a group elected or otherwise appointed under a corporation's governing rules to oversee the company and decide specified matters. For an engineering firm, its role may include setting broad direction, reviewing performance, appointing or evaluating senior management, and approving major transactions or financing. The board's authority comes from applicable law, the corporate charter, bylaws, and other agreements. Some boards include firm owners or managers; others may include outside directors. Management typically runs daily project delivery, staffing, and client operations within delegated authority. A board is not the same as an advisory group, which may offer input without formal decision power, and it does not automatically replace owners' voting rights. Owners should look at the documents that define board composition, duties, and approval thresholds. Governance practices vary with a firm's size, structure, and ownership.
How owners use it
- Owners review board authority when deciding which firm actions need formal approval.
- A board can review operating reports and set questions for management without taking over daily project decisions.
- When considering a sale, owners identify whether the board or shareholders must approve the transaction.
