The Best Size for a Board
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The Best Size for a Board

The Best Size for a Board

Explanation

There are a number of think tanks and organisations that offer best practice guidelines for director and corporate governance.

The minimum and maximum size of the board is usually set out in the Investment Agreement and reflects the specific situation of the company, the governance objectives of the owners and any local legal requirements.

Consideration of the optimal size of the board has evolved. Factors to be considered in the composition of the board include: the skills required to run the company; the interests of shareholders and their desire for active participation in decision-making and its effectiveness; governance; and the logistical and financial implications of frequently convening a large group of people; and the need for balanced decision-making through diversity of opinion.

Recommendation

No number can be set for the optimal size of the board, but the board should periodically review its composition and success and adjust its size accordingly.



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