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September 17, 2019

“Board of Directors” of a public company

Myanmar, though it has opened up its economy and invited foreign countries to come to Myanmar to invest and help develop the country in its economic sectors. However, even after a few years of her endeavor in trying to upgrade the nation’s standard of living conditions, there has found not much better sign of improvement, when comparing her with other countries, she is still trailing behind the tails of our neighbouring countries.
In order to add fuel to the country’s commercial affair sector, there is a need for a compatible Companies Act to regulate all the companies doing business in Myanmar, who are still relying on the old age Myanmar Companies Act to keep all of them in line as much as possible so as not to hinder the economic activities progress of the country.
A rough estimate of about more than 100 public companies in Myanmar are now taking part in import, export business and other industrial activities, each company is on  it’s own running it’s daily operation in order to arrive at the ultimate achievement of  the national target of bigger volume of trade and industrial growth.
To know the good or bad performance of a public company, it is required to center on the part played by the Board of Directors on their role in the control and management of the company. The directors are elected from the shareholders in a general meeting and also the elected  non-shareholders who are knowledgeable in economics, commerce and legal aspects related to company matters, all these elected directors have formed  a group called themselves as Board of Directors of the public company, they are to act as representative of the shareholders, in relation to make decisions on major company issues, such as hiring of executives, dividend policies, option policies and executive compensation policies. In general, the Board made decisions on the shareholders’ behalf, it does not manage the minute details  of the company  management, but they take careful attention for  the following important matters:-
—    approve the company strategy.
—    identify key performance measure.
—    identify risk areas and oversee risk management.
—    plan for and select new executives.
—    design executives compensation packages.
—    ensure the integrity of the published financial statments.
—    approve major assets purchases.
—    protect company assets and reputation.
—    represent the interest of the shareholders.
—    ensure the company complied with laws
Not all the matters are deliberated by the full Board of Directors’ responsibilities, some are delegated to subcommittees, so the Board is required to set up the following committees.
—Executive committee: it is a group with small number of members that might meet when the Board is not available.
—Audit committee: review the financial statements with the Internal and External auditors.
—Compensation committee: determine the salaries of top executives, including the Board itself.
—Nominating committee:  decide the state of directors for the shareholders to vote for approval. Set criteria for selection of directors
The CEO is the top decision maker, all other executives  answer to him or her. CEO is accountable to the Directors, however, the Board should not run the company itself ,that is the role of the CEO and his/her senior management team. The Board is to make sure the right team is at the helm, not to be at the helm themselves. If the Board that meddles, that gets too much involved, so that the management team will be hurting the company, not helping it.
The number of members of the Board of Directors may consist of 7 to 15, while other public companies may up to 35. Every director from the Board must put the interest of the company in first and his / her interest is second. The Board works for the company, the company is their responsibilities. They must always act in the best interest of the company and its major shareholders, the employees and customers.

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