Roles and responsibilities of chairman of board of directors Essay

Roles and responsibilities of chairman of board of directors - Essay Example Roles and Responsibilities of Chairman of Board of Directors (BOD):The chairman's role includes managing the board's business and acting as its facilitator and guide. This would involve: †¢managing the business of the Board and preside over its meetings; †¢setting Board meeting agendas, taking full account of the issues and the concerns of all Board members; †¢ensuring that members of the Board receive accurate, timely and clear information, in particular about the Company’s performance, to enable effective performance of their duties;†¢monitoring progress towards the timely and effective achievement and implementation of the objectives, policies and strategies set by the Board and of other decisions taken by or on behalf of the Board;†¢facilitating the effective contribution of non- executive directors and ensure constructive relationships and open communication, both between non- executive directors and executive directors and between the Board and i nvestors; †¢ensuring that members of the Board understand the views of major shareholders and other key stakeholders; †¢promoting the highest standards of corporate governance;†¢managing the Board’s time to ensure that sufficient time is allowed for discussion of complex or contentious matters; †¢ensuring that new directors receive an induction programme that is tailored and comprehensive; †¢monitoring and addressing the development needs of individual directors and of the Board as a whole and ensure that the performance of individual directors and of the Board ... When an individual serves simultaneously as chairman and CEO, the Board's control over him will be weakened. This does not happen when the roles are separated. The role of Chairman includes managing the business of the Board and monitoring its progress. Non-segregation of duties of Chairman and CEO would reduce the monitoring effectiveness over the management of the company. Opportunistic executives may take advantage of their combined role as Chairman and CEO in order to personally benefit at the expense of the shareholders. The chances of such injustice would reduce to an extent if the roles are separated. However, segregation of roles of Chairman and CEO could give rise to certain issues such as: When the roles are segregated, conflicts between the Chairman and CEO may become common if there is lack of goal congruence. Having a single leader instead of two helps promote effective action by the CEO speeding up response to external events faced by the company. Separation of roles could lead to delays in such response. (2) (i) Theoretical Ex-Right Price (TERP): TERP = [(Number of rights required to buy one new share X Market price before rights issue) + Subscription price] / (Number of rights required to buy one new share + 1) = [(4 x 20) + 15] / (4+1) = 19 Number of shares to be issued in the rights issue = 100 million / 15 = 6,666,667 shares (ii) Value at which the rights are likely to be traded: Value of rights = (Market price of common stock - Subscription Price) / (Number of rights required to purchase one of the new shares of common stock) = (20 - 15) / 4 = 1.25 (iii) Evaluation of the three options: Option 1: Profit that can be earned by Apple Insurance Plc if it takes up the rights: (a) Theoretical ex-right price per