Board of directors

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A board of directors (also known as the board) is an executive committee responsible for jointly supervising the activities of an organisation. For-profit or nonprofit organisations, such as businesses, and government agencies, have boards of directors.

In addition to government rules (including the jurisdiction's corporate law), the rights, duties, and obligations of a board of directors are governed by the organization's own constitution and by-laws, which serve as guidelines for the board. These authorities may define the number of members to be appointed to the board, how they will be selected, and how often the board will meet.

With elected members, the executive board is accountable to and could be subordinate to the organization's full membership, which usually elects the members of the board. In a non-profit organisation with current members, the board of directors is responsible to and could be subordinate to the organization's full membership. When shareholders elect non-executive directors to serve on the board of directors of a stock company, the board of directors assumes ultimate responsibility for the operation of the business. In countries that use codetermination (such as Germany and Sweden), the employees of a firm elect a certain percentage of the board of directors.

The board of directors picks the chief executive officer of the company and establishes the overall strategic direction of the organisation. Identifying and nominating directors (for whom shareholders vote for or against) is often done by the board of directors in firms with dispersed ownership, resulting in a high degree of self-perpetuation. In a non-stock company with no public voting membership, the board of directors serves as the institution's primary governing body, and its members are occasionally appointed by the board of directors themselves.