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Roles and responsibilities of Board members
Your Board needs to meet all its legal and regulatory responsibilities and is accountable to its stakeholders. Board members are individually and collectively responsible for ensuring the social business is effectively and responsibly governed. All Board members need to be aware of their duties and responsibilities.
Financial and legal responsibility for running the company and for submitting information to Companies House on time:
- the confirmation statement
- the annual accounts
- any change in your company’s officers or their personal details
- a change to your company’s registered office
- registration of charges (mortgage).
- to comply with the company’s Governance Document
- to act in best interest to promote the success of the company
- to apply independent judgement
- to act with reasonable care, skill and diligence
- to avoid conflict of interest
- not to accept 3rd party benefits
Financial and legal responsibility for running the charity and for providing information to the Charity Commission on time:
- annual report
- annual accounts
- changes in trustees
- reporting of key issues
- ensure charity is carrying out its purposes for public benefit
- to comply with the charity’s Governing Document and the law
- to act in charity’s best interest
- to manage charity’s resources responsibly
- act with reasonable skill and care
- ensure your charity is accountable.
The Companies Act 2006 arranged (codified) Directors’ duties for limited companies. Although this codification doesn’t apply to Societies, the general duties set out in company law are based on common law and equitable principles. Society Directors are not obliged to follow them, but it is best practice to do so.
Directors of Registered Societies must also operate in line with& the Co-operative and Community Benefit Societies Act 2014. Directors should discharge their legal duties and responsibilities in a way which seeks to ensure that the Society remains committed to operating as a successful co-operative business in accordance with the values and principles that are set out in the International Co-operative Alliance Statement of Co-operative Identity. This is the basis of all co-operatives and serve the interests and protect the assets of the Society’s members by exercising independent and objective judgement.
Broadly there are three categories of legal duty:
- The duty of good faith
- The duty to take care
- The duty to obey the law.
An in-depth guide on the Essential Society Director is available from Co-operatives UK.
Understanding for all Board members on their roles and responsibilities
To assist all Board members to gain a better understanding of their roles and responsibilities, you should consider putting in place the following documentation:
- Board member role description
- Code of conduct for Board members
- Job roles for individual officers – Chairperson, treasurer and secretary
- An induction pack (or Board members handbook) for all new Board members providing key information about the business and their roles within it
- Conflict of Interest policy and Register of Board Members' Interests (please see Template register of Board members interests)
From a practical perspective, the Board may choose to delegate some of its activity to ensure the smooth running of the social business.
Note that while the Board can delegate its authority, it cannot delegate its overall responsibility and is ultimately responsible for everything that goes on in a business.
To be effective, delegation needs to be legal, systematic and have proper oversight. Delegation can be to officers, sub-committees or paid staff and volunteers. As a minimum, you need to ensure:
- Any delegation is in line with your governing document
- The delegation is clearly documented setting out specific terms of reference (rules of operation on what they can and cannot do) for sub committees, and appropriate delegated authority documentation for staff and volunteers setting out financial limits where appropriate
- Establish a clear reporting mechanism for the Board to monitor its delegations.
Please see Example of sub-committee terms of reference
Visit the Social Business Wales website for Developing governance capacity and its section on ‘Developing your social business Board of Directors’.
NB If you use the governance questionnaire, or part of it and want to discuss your answers, please do email firstname.lastname@example.org