Sitting around the boardroom table

Jason Roblin
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If you’ve been on a board in the past or if you’ve been recently invited to sit on a board, it is natural to be a little apprehensive.

One of the first questions that many people will ask is ‘how much of my time will be required?’ While ensuring you have enough time to dedicate to being a volunteer on a board is important, it’s equally as important to understand what the basic duties are. This is aside, of course from actually attending the meetings!

In our last article, we discussed the responsibility of fiduciary duty, but another basic duty that board members are required to fulfil is the duty of care.

The duty of care relates to the directors’ responsibility to exercise the care, diligence and skill that a reasonable person would exercise in comparable circumstances.

If you are like me, you likely had to read that sentence over a couple of times to really grasp the meaning behind duty of care. In short, it basically means that as long as the director or board member takes the time to read the material presented and make a reasonable decision on the information presented, they have met their duty of care.

This is generally what directors or officers insurance is covering directors for. There are very few instances in Canada where courts have ruled that boards have failed to meet their responsibility to the court in relation to duty of care.

In addition, the primary focus of a board is to supervise the management team, and they can do this by reviewing information and asking a lot of questions. For example, it is appropriate to ask questions regarding the budget or financial statements.

It is the management’s role to develop and execute a strategy that has been approved by the board of directors. However, once the board becomes involved in executing strategy, the liability related to those decisions rests with the board, rather than with management.

It’s important to keep in mind that if you ever find yourself in a situation where you feel there is a conflict of interest, please seek independent legal counsel or disclose the potential conflict and remove yourself from the discussion and the decision.

There is a lot of information available regarding board governance. A good resource for condominium board training is the Canadian Condominium Institute (Manitoba Chapter). In addition, the Institute of Corporate Directors (Manitoba Chapter) provides courses applicable to for profit and non-profit corporations for Directors.

Staying informed and up-to-date can make a big difference to how your board functions and to how successful you feel in fulfilling your role as a director.