Starting your board’s new directors off on the right foot

David Mousavi offers a quick guide to new director orientation

Starting your board’s new directors off on the right foot
iStock
David Mousavi

I recall joining my first board like it was yesterday. I had recently graduated from law school and was eager to give back to my community. My mentor had suggested volunteering on the board of a non-profit organization to gain some valuable experience in governance while providing a valuable service to my community.

At the organization’s Annual General Meeting, I felt incredibly honoured to be appointed to the board and eagerly awaited our first meeting. A few short weeks later, there I was – at the table and ready to dive into my new role.

However, for the better part of my first year on the board, I felt pretty lost.

Fast forward more than a decade later: Having served on and advised numerous boards since then, I have come to realize that an effective orientation for new board directors early on is the most important thing to ensure a successful board tenure – both for the new director and the organization.

As a general counsel today, here are some of the basic topics I like to cover in my new director orientations.

Fiduciary Duty

No orientation can begin without ensuring your directors completely understand their fiduciary duty to act in the best interests of their organization. In Ontario, the Corporations Act’s section on Standard of Care is often a pretty good starting point for this discussion and a good example of this standard is directors arriving at board meetings having read the provided materials and fully prepared to participate.

If your directors don’t understand their fiduciary duty, everyone will be in for a very rough ride.

Conflicts of Interest

Having established the fiduciary duty, it’s wise to discuss situations where a director may find themselves in a conflict of interest and, if possible, to provide case studies or examples the entire board can review and discuss. The three main types of conflicts I review are i) acting in the best interests of another person or entity rather than their organization (ii) self-dealing, and (iii) appropriating corporate opportunities.

Though there are many other types of conflicts that may arise, it’s often helpful to begin with these and to reiterate that when your directors are in doubt, they should speak to the chair, CEO, or general counsel.

Policy vs Working Board

After having established the legal duty of your directors and reviewing some potential thorny conflict situations they may face, it’s a good idea to discuss how your organization’s board functions. Typically it’s the size of your organization’s operating budget and staffing complement that will determine how “hands-on” your board will be. With larger, greater staffed organizations the policy board model works best with the board of directors setting the strategic objectives for the organization and the CEO/staff implementing them in the operations. With smaller organizations, the board may need to take a more active role.

In either scenario, having this discussion early can help avoid unnecessary friction due to people not clearly understanding their defined roles.

Codes of Conduct

Most organizations will have an expectation that their directors (and staff) will conduct themselves in accordance with the values of the organization, social norms, and the law. In Ontario, the passage of Bill 168 has set standards for the workplace to ensure an environment free of discrimination, sexual harassment, and bullying.

It’s important that your directors understand that for the purposes of Bill 168, though they may not be “employees” they are still required to conduct themselves appropriately for a safe and welcoming workplace environment. Remind your directors that while vigorous debate is encouraged, unacceptable behaviour such as shouting or bullying at the board table will not be tolerated.

Beyond the board room, your directors will need to understand that they are representatives of your organization to members of the public and so how they conduct themselves out in the world, from social gatherings to online communications on social media, needs to always be in line with your organization’s values and the law.

Director Policies

Each organization will have different director policies suited to their needs but some common ones may include the rules by which meetings are conducted (Roberts Rules?), how decisions about different topics are made (majority, special majority, consensus?), and how those decisions are communicated to the world.

On this last point, the long-standing principle of “speaking with one voice” means the spokesperson for your organization is either your chair or CEO (or any other formally designated individual). There is nothing more embarrassing for your organization than having various messages disseminating from your board or having what appears to be a set of rogue directors taking the liberty to speak on behalf of their colleagues.

There should also be policies related to how expenses incurred by directors in the course of their duties are reimbursed, possible stipends available for director professional development, and perhaps most importantly, what directors must do when they believe they may have a conflict of interest (actual or perceived).

While each organization will have its own formula for onboarding new directors, these are but some of the basics that can help get your directors started off on the right foot.

Once these major topics are out of the way, the real work on getting everyone caught up to speed on your organization’s strategic goals and the important planning for achieving them can begin.

David Mousavi is General Counsel of the Toronto Regional Real Estate Board. His practice encompasses board governance, commercial, data/technology, and privacy law. Prior to joining TREB, David practiced in-house at Canada’s largest telecommunications company and worked as an associate at a full-service national law firm.

Free newsletter

The Canadian Legal Newswire is a FREE newsletter that keeps you up to date on news and analysis about the Canadian legal scene. A separate InHouse Edition is delivered bi-weekly, providing targeted news and information of interest to in-house counsel.

Please enter your email address below to subscribe.

Recent articles & video

Jordan trial delay limits for adults apply to youth criminal trials: SCC

Torkin Manes adds Ted Citrome to its tax law group

StopSOP and the limits of self-regulation: what the statement of principles tells us

Pilot project tests virtual meeting platform

Two global law firms make Fortune list of parent-friendly workplaces

SCC restores acquittals of naturopath convicted of unlawful death manslaughter

Most Read Articles

Nova Scotia scrapping bar exam in overhaul of bar admission process

Self-regulation: the end of an era? Lawyer discipline and the role of law societies

WOMEN IN LAW - Leila Rafi gets real on helping associates see light at the end of the tunnel

B.C. bencher candidate says past advocating for Indigenous people fits Law Society of B.C.’s present