Maravi

‘Many boards don’t understand their role’

‘Many boards don’t understand their role’
Written by Nchima Nchito Jr
Thursday, March 26, 2009 7:42:35 AM

MANY boards do not understand their primary function or tend to neglect their responsibilities as directors, former Institute of Directors (IoD) president Patrick Chisanga has said.

During the ongoing Global Corporate Governance Forum workshop in Lusaka on Tuesday, Chisanga said the boards’ lack of understanding of their primary functions was a costly practice to corporate governance.

“It is this dimension which has led to corporate failures and corporate scandals all over the world, including Zambia and the region generally. Over the last 20 odd years or so,” he said. “In any organisation, the board of directors is the focal point of the corporate governance system.”

Chisanga added that the board was ultimately accountable and responsible for the performance of the company.

And Chisanga said boards of both state-owned and private companies had similar mandates.

“Whether we are talking about state-owned enterprises or private companies, the key objective and purpose of the board of directors is to ensure the company’s prosperity by collectively directing the company’s affairs whilst meeting the appropriate interests of the shareholders and other stakeholders,” he said.

Chisanga called for boards of all companies to pay particular attention to risk policy and risk management as a component to corporate strategy.

“Board collective failure in the area of risk and internal control has probably contributed most to the failure of companies in recent times,” said Chisanga. “The financial crisis engulfing the world economy today has highlighted the fact that risk management, if not adequately addressed by the board of directors can bring about corporate ruin.”

Labels: GOVERNANCE, PATRICK CHISANGA

posted by MrK @ 7:41 AM