special committees as may be determined by ( NSE ) Nairobi Security Exchange in the case of Kenya , and other institutional regulators . In the case of non-listed companies , some by-laws and articles of association are variously set in place to guide roles of directors , boards of governors or council member or many more on case by case basis .
A board member has a fiduciary duty and responsibility to an association where he serves as a board member . That is he / she acts in good faith and is a trustee of stakeholders . As for responsibilities of board members , it is important to clarify three issues in the context of fiduciary duty . Fiduciary duty emphasizes the need for , duty of care , duty of loyalty , and duty of obedience .
Director / board is important for the ultimate direction of an organization . In the case of major commercial companies , a board is responsible for policy making while employees ( manager , supervisors ) are responsible for day to day implementation of the boards policy and strategic plans .
In as much as the board ’ s role is at the apex , that is policy and strategic
‘‘ In as much as the board ’ s role is at the apex , that is policy and strategic plan , the ultimate responsibility lies on the shoulders of the board not employees . The board is jointly and severally liable if a company goes under . So a board is to blame , for overall action or inaction as far as performance of an association is concerned .’’
plan , the ultimate responsibility lies on the shoulders of the board not employees . The board is jointly and severally liable if a company goes under . So a board is to blame , for overall action or inaction as far as performance of an association is concerned .
Another role a board has depending on the size of the organization is to set up board committees . In this case a board delegates authority for some committee to act on behalf of a main board . The deliberations and resolutions of such committees may have some board members and technical staff from within or outside a company . At the end of it all , their recommendations are forwarded to a main board for ratification .
In other words , board committees have no management authority except for those ones delegated to them by the main board . In practice , committees of board usually hold meetings on diverse days before presenting deliberations of their decisions to the main board for endorsement .
Employees ( staff and management ) work with policy and strategic directions as set to them by the board . In other words , employees have no management authority except as directed by board . Now , turning again to fiduciary duty of a board , it pays to obtain a definition of the word “ fiduciary ”. The English Oxford dictionary defines fiduciary as ; of a trust , trustee , and trusteeship held or given in trust .
This therefore means that those in positions of responsibility and authority in our governance structure of an organization , company or association - both volunteers without compensation and employed staff have a fiduciary duty . That is fiduciary duty to the organizations , including duty of care , loyalty and obedience .
This implies that they are required to act reasonably , prudently and in the best interests of the organizations which they serve . They must be on the look out to avoid negligence , fraud , and conflict of interest .
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