Corporate Governance and the Legal Responsibilities of Directors

Alireza Haqiq¹

1) Payam Noor Univerity of Khoy, West Azarbaijan, Iran

IOI Code : AZCC-AAZAFK
Publication : The second international conference on innovation, growth and development in the field of management, accounting and humanities(icimah.com)
Abstract :
    Corporate Governance refers to a set of principles and practices that determine how companies are managed and controlled. In this context, one of the most important components of corporate governance is the board of directors and their legal duties. This board, as representatives of the shareholders, is responsible for the strategic direction of the company and overseeing the performance of the executive management. Among the main responsibilities of the board of directors are setting short-term and long-term company goals, evaluating the performance of managers, and ensuring compliance with laws and regulations. Additionally, the board must protect the interests of shareholders while also considering the needs and expectations of other stakeholders such as employees, customers, and the community. This, in turn, fosters transparency and trust in financial markets and can enhance the company s credibility and performance. The legal responsibilities of the board of directors, especially in financial and ethical matters, are of great importance. Board members are obligated to consider the best interests of the company and its shareholders in their decision-making and to avoid any conflicts of interest. In many countries, laws define specific responsibilities for boards of directors, which include adhering to standards of professional conduct and information transparency. For example, the board must provide accurate financial information and prevent any fraud or misuse. Furthermore, if board members fail to fulfill their duties properly and cause harm to the company, they may be held legally accountable and even face legal consequences. Thus, adherence to corporate governance principles and legal responsibilities is not only essential for maintaining the company s credibility and integrity but also helps create a sustainable and trustworthy environment for investors and other stakeholders.

Keywords : corporate governance board of directors legal duties shareholders