A unitary board, also known as a single-tier board, is a type of corporate governance structure where both executive and non-executive directors serve on the same board. In contrast to a two-tier board system, which separates executive management and oversight functions into separate boards, a unitary board combines both roles into a single governing body.

Key Matters and Considerations in ESG

Key points about unitary boards:

– Composition: A unitary board typically includes a mix of executive directors, who are involved in the day-to-day operations of the company, and non-executive directors, who provide independent oversight and guidance. The board may also include independent directors who bring specific expertise and experience.

– Responsibilities: The unitary board is responsible for setting the company’s strategic direction, making key decisions, overseeing management performance, and ensuring compliance with legal and regulatory requirements. It has the ultimate responsibility for the company’s performance, risk management, and stakeholder relations.

– Decision-making: The unitary board is the highest decision-making authority in the company. It makes important decisions related to financial matters, mergers and acquisitions, major investments, and other strategic initiatives. The board also approves policies and procedures, monitors performance, and assesses risks.

– Board Committees: Unitary boards often establish committees to address specific areas of responsibility, such as audit, remuneration, and nomination. These committees are composed of board members and are tasked with conducting in-depth analysis and making recommendations to the full board.

– Board Effectiveness: The effectiveness of a unitary board depends on factors such as the diversity of its members, their skills and expertise, their independence, and their ability to work together in the best interest of the company. Good corporate governance practices emphasize the importance of transparency, accountability, and the involvement of independent directors.

– Corporate Culture: The unitary board plays a vital role in shaping and promoting the corporate culture of the organization. It sets the tone at the top, establishes ethical standards, and ensures that the company operates in a responsible and sustainable manner.

Unitary boards are commonly found in many countries around the world and are the prevailing governance model in most publicly traded companies. The structure aims to balance the expertise and perspectives of executive and non-executive directors, fostering effective decision-making, accountability, and long-term value creation for shareholders and stakeholders.