Controls by Committees

Controls by Committees

Board Committees

The Board of directors may wish to create committees to deal with particular aspects of its business. A common example in the case of listed companies is a remuneration committee, often made up of non-executive directors, which determines the executive directors' remuneration. This device (hopefully) avoids any suggestion of a conflict of interest.

Management Committees

Management Committees may also be formed and powers may be delegated by the Board to these committees to make decisions within specific business functions which do not require deliberation by the full Board. It makes sense to establish clearly the distinction between decisions to be taken by the full Board or delegated to management committees or individual executives, to avoid the suggestion that management committees or executives have exceeded their authority.