Governance and the Role of the Director
What governance is for
Corporate governance is the system of rules, practices and decision rights by which an organisation is directed and held to account. Its purpose is to align decision-making with the long-term interests of the company and to protect the legitimate interests of shareholders and other stakeholders. Directors sit at the apex of that system: they appoint and oversee management, approve strategy, monitor performance and risk, and ensure the entity complies with its legal and regulatory obligations. Crucially, boards govern; they do not manage. The distinction between oversight and execution is the single most examined idea in this domain.
Duties and the standard of care
Candidates should be able to name the core fiduciary duties in general terms: to act in good faith in the best interests of the company, to act for proper purposes, to exercise powers with care and diligence, to avoid conflicts of interest, and to act with honesty. Directors must inform themselves, ask probing questions, and apply independent judgement. Reliance on management or advisers is permitted only where it is reasonable and made in good faith.
Board composition and independence
Understand independence, diversity of skills and perspective, the separation of chair and CEO roles, and the role of committees (audit, risk, remuneration, nomination). Independence is about freedom from relationships that could compromise objective judgement, not merely the absence of employment.
Traps to watch
Questions often present a director who 'leaves it to the experts' or who defers entirely to a dominant chair. Both attract liability. Another trap is confusing the duty to act in the company's interest with a duty to a particular shareholder or stakeholder group.
Rule of thumb: if a director would be uncomfortable defending the decision to an informed outsider, the process was probably inadequate - document the questions asked and the reasoning.