Types of Board of directors.
There are two types of board of directors. The first type called one- tier board system which used by British and American companies. This one- tier type depends on mix of outside and inside directors also called non-executive and executive directors. The main function of the board is to strategically plan and determine the business policy to achieve the companies’ main goals. Accordingly, the main management’s function is to implement what had been determined by the board of directors. All board members whether they are executive or non-executive board member are appointed by shareholders. The shareholders also have the authority to remove and re-assign any board member due to severe low performance or any critical
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This system is used by European companies in which there is a two tier board namely, the management board and the supervisory board. The supervisory board is appointed by the shareholders and in some companies the supervisory board members could be elected by employees However; the management board is elected and appointed by the supervisory board. The main function of the supervisory board is to elect, monitor and dismiss management members based on performance, misconduct or any reason for restricting in favor of companies interests and accordingly shareholders’ interests.
Another function of the supervisory board is to represent the company in all affairs in addition to approving the annual accounting and can interfere in case of arising any critical activities and management behavior that may seriously affect the companies’ interests.
Banks and companies in Islamic world used a unique system . The board of directors whether they are executive and non executive in addition to another supervisory board called Shari’a Supervisory board. The main functions of the Islamic Supervisory Shari’a board (SSB) are summarized as follows (Banaga et al., 1994):
• To issue a unbiased opinion as per Islamic Shariaa law to the banks’ management and to any other stakeholder party
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In order to guarantee such freedom a number of elements should be taken into consideration to construct a healthy and independent Shari’a supervisory board. These elements are:
• SSB members are not reporting to the board of directors however they are reporting to the shareholders. Accordingly they could be considered as non executive members reporting to the shareholders.
• As a result of the above, the SSB members should be elected by the shareholders in the annual general assembly meeting.
• The general assembly determines the SSB remuneration and compensation not the board of directors.
• The legitimate of control body of SSB has as authority and power as auditors.
There is some criticism regarding the independency of Shariaa board .One of them is the remuneration that paid to the SSB from the financial institutions or shareholders of the financial institution may raise a conflict of interest and consequently it may affect their independency. This criticism has been confirmed by Banaga et al. (1994), who found out that some Sharia board member may approve a doubtful operation to avoid any pressure that may arise from shareholders and satisfy their needs and accordingly remain active in the board. This action may lead another Islamic financial institution to follow and imitate
The corporation’s business is carried out by its management, under the direction of the Board of Directors. The Board, and each committee of the Board, has complete access to management. Also, the Board and committee member’s has access to independent advisors as each considers necessary or appropriate. Mallor, Barnes, Bowers, & Langvardt (2010) state that the Board of Directors also, issues shares, Adopts articles of merger or sha...
Subsequently, the official council organ of the association administration structure is essential in guaranteeing the mission and vision of the association are sought after by the activities attempted by the different hierarchical
Part four set’s up the membership. It states who is in charge of what and what their responsibilities should be. When you have people who know what they are supposed to do and that they are held accountable for their jobs, then failure is not an option.
Corporate gorverance as a system are directed and controlld by companies. Initially, their board of directors should take responsible for the gorverance of companies, which include setting strategic aims of companies , guarantee an effective leadership, supervising the proformance of business management and reporting on it to shareholders. The board's action should comply with the law, regulations and shareholders. In addition, the shareholders also play an important role in gorverance and they have right to decide who can be employed as the companies' directors and auditors to provide good governance structure for them. Therefore, corporate goverance can be regarded as what the board of a company does and how it sets the values of the company.
The Board of Directors is consisted of 11 members: James M. Elliot, the Chairman of the Board, 3 inside members and 7 outside members. The economy is stable and profitable, but that also means a lot of competition in the market. This poses a great opportunity for the company to grow and gain more of the market share. The only foreseeable real threat that the company will face is new competitors in the market.
A board of directors will be formed to assist with forming the Bylaws. Also in guiding all staff. This includes assisting with answering any legal questions, medical questions, and business questions. The board will consist of one
Lastly, in term of services and management of the Islamic institutions. The Islamic needs to have a training process for all theirs staff who works under the Islamic institutions. They needs to provide a huge knowledge of Islamic and important of Islamic financing to our life. From this, it would increase the awareness of Islamic finance. The workers also can deal with their customers or investors more effectively and effeciently when it goes to the Islamic financing. It also would create customers loyalty on their products and services. The information also would spread accordingly based on the shariah principles.
Organizations that only have top management as the board members are more susceptible to accounting malpractices. Members of the board should preferably own shares in the company to ensure diligence when it comes to the interests of the company. Apart from the Board of Governors, there should also be an audit committee in place to oversee the financial dealings of the bank. Members of the board and the audit committee should have basic financial knowledge. Some of the members should also be experts in finances so that they can detect any anomaly that may take place in terms of financial reporting. An overhaul of the regulatory framework is required to empower authorities to intervene immediately, and make improvements. New technology is required. Manual antiquated processes should be eliminated because this causes greater human error and poor
The board of directors has both executive and non executive directors. Executive directors have both executive and board duties to perform while non executive directors have only board responsibilities. Therefore both types of directors vary in the responsibilities and authority they have in the company affairs. Thus the non executive directors devote very little time to company affairs ( only attend board meetings, committee meetings of which they are members or sometimes pay a visit to the company premises for getting knowledge of how things are done).
...ofit. Hence, in terms of risk management Islamic banks are more reliable. In addition, with the increasing population of Muslims all over the world, and the recent economic theories proving Islamic banks’ advantages over traditional banks especially during hard times, I believe that new financial system that are based on Islamic principles will play a very important role in the near future.
The continuing influence of the founders of the company, James Lincoln created the Advisory Board Committee which allowed them to meet twice in a monthly basis to discuss company operations. This was the beginning of a series of personnel innovative policies which helped the company to distinguish from its contemporaries. As the incentive management plan has been established,
K, . N., ER, w., DAVID, K., PAUL, M., WALTER, O., & EVANS, A. (2012). Corporate governance theories and their application to boards of directors: A critical literature review . Prime Journal of Business Administration and Management (BAM), 2(12)(2251-1261), 782-787.
1. Corporate Law for Ontario Business (2012). Farah Jamal Karmali 2. Business Dictionary (2010). http://www.businessdictionary.com/definition/separate-legal-entity.html
Lastly the challenges faced by the Islamic banking is the lack of unity in giving Shariah’s view. Therefor, it gives problem to the agencies as there are different methodologies that are being proposed when elaborating the law. In order to counter this challenges, agencies need to take initiatives of choosing the view which is parallel or nearly parallel with what was underlined by the Al-Quran and As- Sunnah.
According to Carol Padgett (2012, 1), “companies are important part of our daily lives…in today’s economy, we are bound together through a myriad of relationships with companies”. The board of directors remain the highest echelon of management in any company. It is the “group of executive and non-executive directors which forms corporate strategy and is responsible for monitoring performance on the behalf of shareholders” (Padgett, 2012:1). Boards are clearly critical to the operation of companies and they are endowed with substantial power in the statute (Companies Act, 2014). The board is responsible for directing and steering the company. The board accomplishes this by business planning and risk management through proper corporate governance.