Roles of the chairman in corporate governance

Roles of the chairman in corporate governance

1. The chairman is the leader of the board of directors in a private or public company although other organisations are often run on similar governance lines.

In this role, he or she is responsible for ensuring the board’s effectiveness as a unit, in the service of the shareholders. This means agreeing and, if necessary, setting the board’s agenda and ensuring that board meetings take place on a regular basis.

2. The chairman represents the company to investors and other outside stakeholders/constituents. He or she is often the ‘public face’ of the organisation, especially if the organisation must account for itself in a public manner. Linked to this, the chairman’s roles include communication with shareholders. This occurs in a statutory sense in the annual report (where, in many jurisdictions, the chairman must write to shareholders each year in the form of a chairman’s statement) and at annual and extraordinary general meetings.

3. Internally, the chairman ensures that directors receive relevant information in advance of board meetings so that all discussions and decisions are made by directors fully apprised of the situation under discussion.

4. Finally, his or her role extends to co-ordinating the contributions of non-executive directors (NEDs) and facilitating good relationships between executive and non-executive directors.