What is the difference between the board of directors and the management?

The Board of Directors ( the “Board”) is the governing body of the company and is responsible for taking strategic and policy decisions for the company. Some of the responsibilities of the Board are ensuring compliance of the rules and regulations, reviewing the company’s policies and procedures, approving annual budgets proposed by the management of the company; new business projects. The board of directors are regulated by the Companies Ordinance and the company’s article of association.

The Management of the company is responsible for the company’s day to day operations. The head of management is the CEO and is selected by the Board.  

The role of the Board and the management of the company

1. The Board is responsible for the appointment of the management and determination of the management structure;
2. The Board delegates the responsibilities to the management and determines what matter it should reserve for itself;
3. The management is responsible for implementing the Board’s decisions, policies and strategies and the Board supervises the management to ensure the short and long terms objectives are being met;
4. The Board is responsible for the overall governance and the management of the company.

For SMEs, the board and management functions are perhaps centralized. However,  a separate Board essentially improves corporate governance and also helps in balancing the interest of the shareholders and the management.

Key takeaway

• The board of directors is responsible for the management of the company.
• The management is responsible for implementing the decisions of the board of directors

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