Good Governance Guides

Good Governance Guide: No 1.1

Category: Structure
Subject: Board Charter
Source: Chartered Secretaries Canada

Many corporations, both private and publicly listed, have recognized the need for some foundation document which establishes the context and framework for good governance. That document has come to be known as the “Charter”. The Charter does not have to go into detail, yet needs to identify the role of the Board and how it intends to function given the nature of business operations. Indeed, many Charters are so broad as to have reasonable applicability for small, medium and large corporations or Associations.

In general, the Charter seeks to provide a blueprint for operations in so far as it identifies how the Board provides oversight and in what areas it wishes to perform a decision-making function. It likely will delineate what authority the Board wishes to retain, as well as that which it desires to delegate to Management. It might also attempt to bring clarity to the matter of accountability.

The Board will likely retain responsibility for the following and may wish to elaborate on these in the Charter document:

• Strategic Planning process;
• Internal Controls – particularly, financial controls;
• Risk Management Framework;
• Succession Planning;
• Evaluation of Management;
• Establishing Committees of the Board, together with Mandates;
• Delegation of Authority; and
• Oversight of Public Communications and Disclosure.