According to good corporate governance principles, the board’s responsibilities include the determination of business direction, strategies and key policies that will create sustainable value for the organization.  While the implementation tasks belong to the Management, the Board will provide guidance with long-term perspective and closely monitor the performance as it is entrusted by shareholders to perform fiduciary duties.

Since the Board and Management must work together, the Board effectiveness is relevant to the Management. Therefore, all directors should emphasize on collaborative leadership to enhance constructive relationship between the Board and Management. A clear common understanding of the scope, roles, and responsibilities of the Board and Management is also essential in creating healthy relationship and ensure smooth collaboration between both parties.

The development of this guideline reflects the significance of the matter.  We sincerely hope contents of this document will help the Board perform their roles more effectively. The guideline divides into two sections including 1. Key Principles and 2. Guidelines. 

Key Principles of this guideline are as follows:

1.       Good corporate governance is essential mechanism that connect shareholders, the Board, and Management.  Each party must understand and perform their roles and responsibilities appropriately to ensure operations are in alignment with expectations of stakeholders.

2.       The Board and Management have different roles and duties.  The Board has roles to oversee, set objectives, purpose, and key policies while the Management has roles to implement in accordance with direction set by the Board.

3.       By granting administration authority to the Management, the Board and the Management have to work closely.  Therefore, the Board should ensure relationship with the Management is positive and based on common understanding to create smooth collaboration.

4.       The Board should perform its duties and express opinions independently, based on quality information adequate to make sound decision through reports presented by the Management, to ensure resources are effectively utilized in alignment with objectives.

5.       The Board should encourage a climate of trust and openness in working with the Management to make them feel confidence in seeking guidance, advice, as well as disclosing comprehensive and straightforward information to the Board.  

6.       The Board should set the scope, roles, and responsibilities of the Board and Management in written so that both parties can use as reference in performing their duties. 

7.       The oversight roles of the Board require various forms of supports from the Management.

7.1         Primary responsibilities of the Board - The Board may assign the Management to propose or support information for the consideration of the following matters:

7.1.1     Determination of business objectives and purpose for sustainability and long-term value creation

7.1.2     Driving ethical corporate culture and good corporate governance

7.1.3     Determination of appropriate Board structure and practices

7.1.4     Selection, compensation setting, performance evaluation, succession planning for the CEO and key executive positions

7.1.5     Determination of personnel compensation structure framework  

7.2           Shared responsibilities between the Board and Management - These are matters that both the Board and Management should jointly consider and decide.  The Management is tasked to implement and periodically report progress to the Board.  They include:  

7.2.1     Determination and revision of strategies, goals and annual plan.

7.2.2     Oversight of risk management and internal control.

7.2.3     Appropriate delegation of authority to the management

7.2.4     Determination of budget and appropriate resource allocation framework.

7.2.5     Monitoring and evaluation of the Management’s performance.

7.2.6     Ensuring disclosure of financial and non-financial information. 

7.3           Primary responsibilities of the Management – The Board only has monitoring role in the policy level and monitor implementation progress of the Management.

8.     The Board may need to contribute more time to collaborate with the Management in various matters as deem appropriate, particularly in situations significantly affecting corporate sustainability. 

9.     The Board and Management should jointly consider reviewing the scope of roles and responsibilities of both parties on an annual basis.  They should directly communicate expectations toward each other to create better understanding that would lead to more effective work process. 

For full "Guideline on Division of Responsibilities between Board and Management" please download below