Corporate Governance Kelompok 2

CORPORATE GOVERNANCE
KELOMPOK 2 :
Nadhillah Yusrini Zuhri -11180000250

Nabiilah Aldina - 11190000173
Afifah Ainiyyah - 11190600045
Roles and Fiduciary Duties of the
BOD
Role of the Board of Directors
The board of directors is ultimately responsible for the company’s business

affairs and governance as stated in its governing documents, including the
articles of incorporation, the by laws, and shareholder agreements.
Roles and responsibilities of boards of directors are to :
(1) Represent shareholders and create shareholder value.

(2) Align the interests of management with those of shareholders while protecting
the interests of other stakeholders (customers, creditors, suppliers).
(3) Define the company’s mission and goals.
(4) Establish or approve strategic plans and decisions to achieve these goals.
(5) Appoint senior executives to manage the company in accordance with the
established strategies, plans, policies, and procedures.
Fiduciary Duties of Board of Directors
The fiduciary duty means that, as shareholder’s guardians, directors are

trustworthy, acting in the best interest of shareholders, and investors in turn have
confidence in the directors’ actions. Fiduciary duties of boards of directors are
mandated by the laws of the state of incorporation, are generally specified in the
company’s charter and bylaws, and are often interpreted by courts when there are
allegations of breach of fiduciary duties.
Fiduciary Duties of Board of Directors
 Duty of Due Care - determines the manner in which directors

should carry out their responsibilities. Failure to uphold the set
stipulations may constitute a breach of the fiduciary duty of care of
expected directors.
 Duty of loyalty - requires directors to refrain from pursuing their
own interests over the interests of the company.
 Fiduciary Duties and Business Judgment Rules - directors operate
under a legal doctrine called “business judgment rules”.
 Duty of Good Faith – Its an important of directors fiduciary
obligations, and any irresponsible, reckless, irrational or
disingenuous behaviors or conduct can breach that fiduciary duty.
 Duty to promote success – directors should act in a good faith and
promote the success of the company to benefit of its shareholders
and other stakeholders. Includes: approving the establishment of
strategic goals, objectives and policies that promote enduring
shareholders value as well as protect existing value.
 Duty to exercise due diligence, independent judgment, and skill -
directors should be knowledgeable about the companies’ business
and affairs, continuously update their understanding of the
company activities and performance, and use reasonable diligence
and independent judgment in making decisions.
 Duty to avoid conflicts of interests - potential conflict of interest
may occur when director: receives a gift from a third party he is
doing business with, either directly or indirectly enters into a
transaction or arrangement with that company, obtains substantial
loans from the company, or engages in backdated stock options.
 Fiduciary Duties and Business Judgment Rules - directors operate
under a legal doctrine called “business judgment rules”.
BOARD COMMITTEE
 Board committees normally  Public companies usually have

function independently from the following board
each other, are provided with committees:
sufficient resources and  Audit committee
authority, and are evaluated  Compensation committee
by the board of directors.  Governance committee
 Nominating committee
 Disclosure committee
 Other standing or special
committees
BOARD MODELS
 One-Tier Board Model -  Two-Tier Board Model - The

consists of both inside two-tier board system,
(executive) directors and consisting of a supervisory
outside (nonexecutive) board and a management
directors. Inside directors are board, better known as the
perceived as the decision German board model,
managers and outside establishes different
directors are assumed to have authorities and
the power and duty to monitor responsibilities for members
those decisions. of each board.
BOARD MODELS
 Modern Board Model - the structure of the modern board based

on the two components of strategic board and oversight board is
the natural offshoot of the emerging corporate governance
reforms.
 Board Leadership – The effectiveness of board meetings depends
largely on the leadership ability of the chairperson to set an
agenda and direct discussions.
 CEO Duality – implies that the company’s CEO holds both the
position of chief executive and the chair of the board of directors.
BOARD CHARACTERISTICS
 Lead Director – demand for  Board Authority – is granted

Lead Director increased trough shareholder elections.
because of the presence of SOX substantially expanded
CEO duality, resulting from the authority of directors,
growing concern that duality particularly audit committee
places too much power in the members, as being directly
hands of CEO, which may responsible for hiring, firing,
impede board independence. compensating, and overseeing
the work of the companies’
independent auditors.
 Responsibilities – the primary responsibility of the board of

directors that the companies assets are safeguarded and that
managerial decisions and actions are made in a manner of
maximizing shareholders wealth while protecting the interests of
other shareholders.
 Resources – board of directors should have adequate resources to
effectively fulfill its oversight functions. Resources available to
the board consist of legal, financial, and information resources.
 Board Independence – implies  Director compensation – best

that, to be independent practices suggest that
director shouldn’t have any increases in stock ownership,
relationship with the company reduction in cash payments,
other than his or her and charges in compensation
directorship that my should be aligned with
compromise the director’s shareholders long-term
objectivity and loyalty to the interest determined by board,
companies shareholders. approved by shareholders, and
fully disclosed in public
reporting.
 The board of directors is directly responsible C
for defining the company’s objectives;
establishing policies and procedures to ensure O
achievement of defined objectives; monitoring N
the established policies and procedures;
assuming ultimate accountability for the C
company’s business and affairs; and ensuring L
that the company is conducting its business in
the utmost ethical, legal, and professional U
manner to create long-term shareholder value
while protecting the interests of other
S
stakeholders. I
O
N
THANK YOU

Corporate Governance Kelompok 2

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CORPORATE GOVERNANCE

Nadhillah Yusrini Zuhri -11180000250

The board of directors is ultimately responsible for the company’s business

(1) Represent shareholders and create shareholder value.

The fiduciary duty means that, as shareholder’s guardians, directors are

 Duty of Due Care - determines the manner in which directors

 Board committees normally  Public companies usually have

 One-Tier Board Model -  Two-Tier Board Model - The

 Modern Board Model - the structure of the modern board based

 Lead Director – demand for  Board Authority – is granted

 Responsibilities – the primary responsibility of the board of

 Board Independence – implies  Director compensation – best

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