| This article looks at the factors and qualities that | | | | elements of those non-executive directors. This is |
| create good corporate governance and its best | | | | mainly to achieve the check and balance whereby no |
| practices. For this article, we shall address the area of | | | | single individual has the ultimate control over the board; |
| Board of Directors, since they are the driving force of | | | | - Whether the board has representation diversity in |
| every organization. Therefore, a strong governance | | | | terms of professional experience, race, gender and |
| framework needs to be established, and should serve | | | | technical know-how of the industry. Competency |
| the following objectives: | | | | There should be a mixture of core competencies |
| 1. Clarify the roles, responsibilities and accountabilities of | | | | among the directors in the board to cover most |
| the board members and management team; | | | | aspects of the organization. Certain directors need to |
| 2. Enable the board to provide strategic guidance and | | | | have relevant industry specific knowledge and |
| effective oversight of the management; and | | | | experience whereas others are professionals having |
| 3. Ensure that no one single individual has too much | | | | focused expertise in areas such as finance, |
| power or influence on the organization. Further to the | | | | accounting, risk management etc. |
| above, the board's main role is to protect the interests | | | | Activeness |
| of the shareholders and other relevant stakeholders. | | | | The board is required to play an active role in directing |
| At the same time, they have to ensure that the | | | | the organization. Although they may not be playing an |
| company is able to compete in the market. The | | | | active role in the daily operational issues, the board is |
| directors are also expected to be able to have a firm | | | | expected to be vigilant in ensuring the management is |
| grip on the company's internal controls processes, to | | | | implementing the direction of the board. |
| ensure operational and financial risks are identified, | | | | In addition to playing the strategic role within the |
| addressed and managed. | | | | organization, the board is also expected to monitor the |
| In a general context, the effectiveness of a board | | | | management's decisions and actions, and if there are |
| within an organization depends on a few factors, | | | | inconsistencies found, they should question the |
| namely, size and composition, competencies, | | | | management based on factual knowledge. |
| activeness and leadership qualities. These factors are | | | | Furthermore, the board is also expected to ensure that |
| non-exhaustive and non-conclusive whereby every | | | | the management conducts their tasks ethically and |
| organization should include relevant gauge wherever | | | | comply to all financial reporting and regulatory |
| necessary. | | | | requirements. |
| Size and Composition | | | | Leadership Qualities |
| There is no such thing as the optimal size for the | | | | Being the driver of the organization, the board must |
| board, but the Companies Act 1965, Malaysia | | | | should leadership qualities such as having ability to |
| determines the minimum number of directors and the | | | | inspire talents and provide strategic direction and vision |
| Articles of Association normally specifies the | | | | of the organization. They have to be able to evaluate |
| maximum. However, instead of arriving at the absolute | | | | strategic decisions, conceptualizing ideas and innovation |
| number, an organization should look into certain factors | | | | to continually pressing for growth and address future |
| to gauge the optimum size of the board. Some of | | | | challenges. |
| these factors include:- | | | | Whilst the board of directors plays a very big part in |
| - Size of the organization, scope of business and | | | | corporate governance, certain other factors like risk |
| geographical diversity; | | | | management, internal and external audits too affect |
| - There should be a balance between executive and | | | | the framework of corporate governance. |
| non-executive directors as well as the independent | | | | |