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WORDS TO UNDERSTAND

Company Boards

The term “company boards” refers to the bodies within a company responsible for direction, management, and control.

 

The most important are:

  • the shareholders’ meeting;
  • the Board of Directors;
  • the Board of Statutory Auditors;
  • the internal committees.
 
Company Boards: What they are

The Shareholders’ Meeting

The shareholders’ meeting is the company body that adopts resolutions. Among its tasks, it adopts resolutions on the approval of the financial statements, the appointment of directors, the statutory auditors and the chairman of the Board of Statutory Auditors. The shareholders’ meeting also sets compensation for the directors and statutory auditors and makes decisions regarding the company’s ordinary operations. An ordinary shareholders’ meeting must be called at least once a year within four months of the end of the company’s financial year.

The Board of Directors

The Board of Directors is the company's executive body whose task is to implement the decisions taken by the shareholders' meeting and running the company's operations. The shareholders' committee determines the number of directors, if not already set in the company's memorandum of association, and it also sets their compensation. Board of Directors’ resolutions must be adopted by absolute majority and with the presence of the majority of the directors in office.

The Board of Directors plays a fundamental role in corporate governance. It is responsible for approving organizational strategies, developing management policy, hiring, supervising and compensating senior managers, and ensuring the organization’s legal responsibility before the authorities. Individuals may be members of the boards of directors of more than one company. The Board of Directors consists of directors and is led by its chairman.

The Board of Statutory Auditors

The Board of Statutory Auditors is responsible for control and its task is to monitor the directors’ activities, i.e. that the company's management and administration are executed in compliance with law and the company's memorandum of association.

The Board of Statutory Auditors consists of three or five acting members and two alternates, all appointed by the company’s shareholder's meeting, and they may be removed only for just cause and by court decision. The Board of Statutory Auditors must meet at least each quarter and may pass resolutions, by absolute majority, if the majority of the members are present. The shareholders’ meeting sets the auditors’ compensation.

The Committees

The Self-Regulatory Code for listed companies, issued in 2006 by the Borsa Italiana S.p.A. Corporate Governance Committee, calls for the setting up of further internal control boards, defined as committees. The main ones are:

The Compensation Committee

The committee’s task is to submit proposals to the Board of Directors about compensation for executive directors and other directors that fill certain positions. It also periodically evaluates the criteria adopted for the compensation of executives with strategic responsibilities, monitoring their application based on the information provided by the executive directors.

The Internal Control Committee

Its main task is to ensure the safeguarding of the company’s assets, the efficiency and effectiveness of its operations, the reliability of its operating and financial information, and compliance with laws and regulations.

It consists of non-executive directors, the majority of whom independents. The committee expresses opinions on specific issues regarding the identification of the main risks for the company and evaluates the correct application of accounting standards and their uniformity for the purposes of drafting the consolidated financial statements.

 
Company Boards: The most important ones
 


Page updated 10 january 2014

 
 
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