The role of the Chairman is to manage the board and ensure that its policies are put into practice by the management. He must have a good knowledge of company’s financial position and closely monitor its performance. The chairman has to work closely with the company secretary to address legal issues.
With the knowledge of the way in which the company is managed and its financial standings, the chairman has to play a proactive role. He should be in a position to identify the short comings and see that the board discusses these. By being proactive the chairman can help the CEO take corrective action before things get out of hand. Since the chairman leads the board, its for him to maintain good relation between the board and the company’s shareholders. In the process of maintaining such relationship he ensures that the board makes decision in accordance with the interest of the shareholder and all other stakeholders of the company. Primarily the chairman has to cater to the internal needs of the board and its conduct. He also should maintain good relation with the CEO and executive and non-executive directors.
Some of the other important functions of the chairman include:
- To act as a representative of the company
- To ensure that policies and practices are in place
- To see to it that directors make good decision
- To act firmly in times of crisis
- To upgrade the competence of director so as to meet the current and future needs of the company.