How Board Portals Improve Corporate Governance

Enron, WorldCom, and Tyco are three companies that rocked the corporate world in the early 2000’s for fraud and corruption scandals.

These events forced corporations (and their board of directors) to evaluate the processes and structures they had — or planned to put in place — for directing and managing the organisation. Today, good corporate governance has become an important foundation for strong performance and long-term success. 

It is true that good governance begins with effective boards. But it doesn’t have to end there. In recent years, boards have increasingly turned to board technologies, such as board portals, to help them become more efficient and effective in fulfilling their strategic mandate. 

DEFINING CORPORATE GOVERNANCE

From a macro-perspective, corporate governance refers to how a business is led or managed. It involves directing the organisation while considering all stakeholders’ interests and balancing broader societal and economic goals. 

There is a business case in investing in good corporate governance. The benefits include:

• strategic and competitive advantage
• greater resilience to change
• higher confidence among all stakeholders  
• ability to raise capital efficiently and effectively
• improvement of brand equity 
• lowers probabilities for mismanagement, corruption and risk

UPHOLDING THE PILLARS OF CORPORATE GOVERNANCE WITH BOARD PORTAL TECHNOLOGY

The oft-cited pillars of good corporate governance are accountability, transparency, efficiency, compliance and security. Board portals have emerged as a governance solution that allows boards to uphold these five pillars. Let’s take a look at each of them.

1. Accountability

The principle of corporate accountability refers to the ownership and/or assumption of responsibilities by specified persons in order to attain organisational goals. It’s about ensuring individuals are held answerable for doing assigned tasks properly. 

How a Board Portal Can Help

Board portals, such as Boardlogic, often serve as a central repository for sensitive, board-related meeting information. When files are uploaded to the board portal for distribution, reference or circulation purposes, they are version-controlled. This creates an important audit trail that allows board members to track the changes that were implemented, when they were finalised for circulation, and the individual(s) who made them. 

In addition, board portals often have task-tracking features. Tasks can be assigned to specific board members, providing other directors with an overview of the individuals responsible for their completion.

These features make accountability for tasks clearer and also more transparent.

2. Transparency

Incidences of fraud and the occurrence of corporate scandals in recent years have been attributed to lack of transparency in governance. Because of this, initiatives have been pushed to ensure these events do not reoccur in the future. Some of these include drafting codes of conduct, making required disclosures, monitoring by agencies and imposing of fines for legal or regulatory non-compliance.

Transparency involves the disclosure of information about processes, systems and data about the corporation in a timely manner. This should be delivered in a form that’s acceptable and understandable to stakeholders – including regulatory/legal agencies. Transparency assures parties that transactions are observable and that all stakeholders and shareholders have accurate and verifiable insight into the profitability, ownership and governance of the company. 

How a Board Portal Can Help

Since board portals can function as a centralised file repository, both external and internal auditors/observers have access to the board data that they need, when they need it.  All pertinent records and files associated with specific board meetings are available without spending hours rifling through voluminous paper-based board packs or emails and attachments. With board portals, files are retrievable (through a search functionality) in a matter of clicks, not hours.   

Approved meeting minutes can also be archived. The meeting minutes then become immutable documentation for referencing board decisions, resolutions and discussion topics — making it easier to determine if actions, decisions, processes have been proper and above-board.

3. Efficiency

The discussion on efficiency requires an understanding that corporate entities and their boards bear the responsibility of ensuring that all facets of the organisation function at an optimal level. The responsibility is borne from the fact that corporations are accountable to shareholders with respect to how their investments are managed and used. Many might do a deep-dive into the operations of the business for efficiency gains, but efficiency has its place in board and corporate governance.

How a Board Portal Can Help

By digitising board meeting workflows, boards, company secretaries and administrators significantly reduce the amount they spend on administrative tasks. From sending out meeting invites to distributing digital board packs, utilising a board portal solution translates to a more efficient use of time and resources for all parties concerned.

Let’s take the digital board pack feature as an example.

Company secretaries no longer need to spend hours or days building a board pack. The availability of digital board packs makes board pack distribution instantaneous and secure. It removes the need for email management (or courier and shipping fees, if delivery is paper-based), large attachments and mitigates the risk of presenting outdated or incorrect information to the board. All these tasks are completed from the portal, in a matter of clicks.

On the board’s end, directors are more likely to spend their time reviewing board materials as opposed to managing and tracking multiple versions of bulky board packs that come through their physical or email mailboxes. Board portals drastically eliminate the administrative tasks required from board members. By allowing them to make better use of their time, directors become more effective in their roles.

In other words, board portals ensure that information delivery, filing, and storage of information are as efficient as possible. Board portals lay the groundwork for efficiency gains: boards can focus on governing with ease, convenience and greater confidence.

4. Compliance

Compliance is adhering to the checks and balances that have been in place to manage overall risk. Complying with industry regulations, government legislation or established internal and external standards ensures that transactions, processes and systems are fair to shareholders and stakeholders.

How a Board Portal Can Help

While the use of a board portal doesn’t make the board compliant per se, it does simplify internal and external audits required to verify compliance. Digital records are created for auditors, regulators, shareholders and other important stakeholders. As noted earlier, board-related files are accessible to the appropriate parties whenever necessary. Gaps are more easily identified and addressed, mitigating the risks associated with regulatory fines or legal consequences. 

5. Security

The amount of information that companies and organisations retain and process today is unprecedented. It’s not entirely surprising that security has become a cornerstone for corporate governance. The onus is on companies to protect the data entrusted to them, especially in light of the escalating number of data breaches in recent years. As of 2020, the average cost of a data breach is USD $3.9 million — a figure that most organisations can’t scoff at.

Companies continue to invest in security systems to protect their operations. These technology solutions are not merely IT measures, but are now also woven into the organisation’s overarching cyberrisk strategy.

How a Board Portal Can Help

Boards handle sensitive company information on an ongoing basis. Communication amongst directors (via email, for instance), as well as the information contained in board packs tend to be highly-confidential. Because of this, board members are often targets for phishing attacks, i.e. identity theft, and a range of other cybercrimes.  

Board portals manage the confidentiality and safety of board files and documents. They help limit the use of email for board communications with their collaboration and messaging features. But their built-in security features set them apart.

A solution like Boardlogic implements security measures such as granular file-permission settings for all uploaded board files, biometric authentication (FaceID or TouchID), and remote access removal for lost or stolen devices, to name a few. Best-in-class board portals also have strong data encryption, regular backups, and undergo third-party testing. 

Security is of paramount importance. From a security standpoint, the board cannot afford to be the weakest link in the organisation. It is important to recognise that building an organisational culture around this pillar of corporate governance begins at the top.

CONCLUSION

With the demands of today’s business environment, it is worthwhile for boards to consider the use board meeting management solutions to help exhibit the principles of good governance. The use of a board portal not only streamline boards’ workflows, but it also aligns boardroom-related activities with all five pillars. This yields its own advantage, which this PwC paper sums up nicely:

The two pronged approach of leadership commitment and technology adoption helps lead organisations to that end-goal.