This discussion comes up regularly, and although for many companies the board is not just a formality but also highly value-creating and the powerhouse of the business, its members carry a great deal of responsibility. Many new board members are currently joining Norwegian limited companies, so here is a short guide to practical board work.
The choice of board members and their specific skills is therefore crucial. It is important to be deliberate about how the board is composed and what expertise you need in new board members.
The general meeting elects the board members. To function optimally, the board should include members with varied expertise who complement one another, cover the company’s need for expertise and, as a collective, can help the company achieve its goals.
Board members work first and foremost in the best interests of the company, even though they are elected individually. A board member therefore represents only themselves on the board, but will often report to those who elected them. The articles of association usually determine the term of office, but a member may step down earlier if necessary.
The chair is responsible for organising board meetings and ensuring that important matters are discussed. All relevant documents must be available to board members well before the meeting.
Meetings can be held in many ways – in person, by phone or by video. For some matters, a simplified procedure by email is also the most practical. It is important to ensure good communication and an effective decision-making process.
A board member should be alert to potential conflicts of interest, particularly if there is a risk that their personal or financial interests could conflict with the company’s interests.
It is important to document the board’s decisions thoroughly. All decisions, disagreements and attendance should be carefully recorded in the minutes. The minutes are usually drawn up by the CEO
When revenue is insufficient, the board must step up its oversight and ensure that the necessary measures are taken, particularly if equity falls below acceptable levels. This may require more frequent and perhaps digital meetings, as well as convening an extraordinary general meeting.
The board should keep a close eye on the company’s equity and ensure that no decisions are taken that could put equity at risk.
Board members can be held liable for any loss they cause the company. It is essential to act in the company’s best interests and avoid negligence. The rules on board liability in the Norwegian Private Limited Liability Companies Act (aksjeloven) apply to everyone who takes on the role of board member in a limited company
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Read more here about how we work with board recruitment