Governance · The board · Component
Board charter
The board’s mandate in writing: its role, the matters reserved to it, its committees and how authority passes to management.
The deliverable
What it is
A board charter — sometimes called terms of reference or rules of procedure — states what the board is for and how it works. Many jurisdictions require some version of it. Smaller firms without one still have a charter in practice, made of habit and of whatever the founder brings to the meeting.
For an advisory board the charter has an extra job: making plain that its members advise and do not decide. That distinction protects the advisers from liability they never accepted, and the owners from mistaking advice for a decision.
One level in
What it is made of
Each element is a constituent part of the component. Follow one to see the attributes it carries.
Reserved matters
The decisions the board keeps for itself; everything outside the list is delegated to management.
3 attributes: Matter · Threshold · Recorded in
LearnCommittees
Standing committees of the board, such as audit, risk, remuneration and nomination, and what each may decide alone.
3 attributes: Committee · Authority · Committee chair
LearnDelegation to management
The authority the board passes to the chief executive, its limits, and the requirement that it is recorded further down.
3 attributes: Delegate · Spending limit · Exclusions
Learn
Read the other way, the list of reserved matters is the full extent of management’s authority.
The other components in the board
Board skills matrix
The capabilities the board needs over the next few years, set against those its members bring, used to choose the next appointment.
LearnAnnual board cycle
The year’s board meetings, each with the standing items it must cover, fixed before the year begins so that nothing is crowded out.
LearnBoard evaluation
A periodic review of how the board works — composition, information, discussion and decisions — with the actions that follow from it.
Learn