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CGF ARTICLES, OPINIONS & EDITORIALS

IMPROPERLY APPOINTED BOARDS SPELL DISASTER FOR ORGANISATIONS (2016-10-17)

By Terrance M. Booysen and reviewed by Joanne Matisonn (Head of Corporate Governance: TMF Corporate Services)

It has been said that it is very difficult to accurately describe what exactly defines a good board of directors, and trying to find a scientific formulae for a so-called ‘perfect’ board is improbable.  At the inception of the first round of appointing directors on the board, the shareholders will usually have a very good idea of the ideal group of directors which they believe will be best suited and qualified to start and direct the business.

At this early stage of the organisation’s existence, the board will require unique people with the same vision as its founding shareholders, but have a diversity of thought and outlook to enrich the strategic process. As with most new business ventures, there’s usually a lot of risk -- even levels of uncertainty regarding business success -- and it is therefore critical that the board ensure they have the correct people who are capable of actually doing the work cut out for them. Indeed, the board must be capable of aligning the vision with a strategic path, whilst at the same time being acutely aware of the risks associated with the many business failures that are linked with start-up organisations.

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