Chairman of the board: Overview, definition, and example
What is the chairman of the board?
The chairman of the board is the leader of a company's board of directors. They oversee board meetings, guide corporate governance, and ensure that the board makes strategic decisions in the best interest of the company. While the chairman does not manage day-to-day operations (which is the role of the CEO or management team), they play a key role in setting policies, advising leadership, and representing shareholders.
For example, in a growing company, the chairman might lead discussions on long-term expansion plans, approve major business decisions, and ensure that executives are held accountable for their performance.
Why is the chairman of the board important?
The chairman provides leadership and direction to the board, ensuring that corporate governance is strong and the company stays aligned with its goals. They help balance the interests of executives, shareholders, and other stakeholders while making sure the company follows legal and ethical standards.
For SMBs, having a chairman can bring structure and oversight to decision-making, particularly in family-owned businesses or startups seeking investors. A strong chairman helps maintain transparency, manage risks, and provide guidance to management.
Understanding the chairman of the board through an example
Imagine a small tech company with multiple investors and directors. The board elects a chairman to lead meetings, ensure fair discussions, and keep decision-making focused on long-term business success. The chairman does not run daily operations but works with the CEO to set business strategy and review company performance.
In another case, a family-owned manufacturing business brings in an external chairman to help with succession planning. The chairman ensures that leadership transitions smoothly and that the company continues growing while maintaining strong corporate governance.
An example of a chairman of the board clause
Here’s how a chairman of the board clause might appear in a contract:
“The Chairman of the Board shall preside over all board meetings, provide strategic oversight, and ensure that the Board of Directors fulfills its governance responsibilities. The Chairman shall not be involved in daily operations but shall act as a liaison between the Board and executive management.”
Conclusion
The chairman of the board plays a crucial role in corporate governance, guiding the board’s decisions and ensuring accountability at the highest level. For SMBs, having a chairman helps create structured leadership, supports business growth, and ensures that strategic decisions align with the company’s long-term goals.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.