What Is a Private board?

A private board refers to the board of directors of a privately held company. Although the baseline responsibilities are the same as in public boards, private boards tend to have a slightly different structure and function.

Structure of a private board

Here is the typical structure of a private board:

Chairperson

The chair’s role is non-executive, however they may also hold an executive position. But as chair, they concentrate solely on how the board functions. They are responsible for setting agendas and leading the board. 

CEO

In private companies, the CEO is often the major company shareholder or key founder. Some boards might only allow the CEO to attend board meetings without voting.

Board members

The board of directors in private companies is mostly composed of individuals directly associated with the company. The exact composition of executive and non-executive directors depends on the company’s byelaws.

Executive committee

Sometimes, private boards might establish an executive committee, a subset of the board, to handle critical decisions. It is typically composed of the chair, vice-chair, CEO and other key executives.

Board committees

Private boards often form board committees — such as audit and compensation committees — to address specific company operations and conduct in-depth analyses.

Advisory board

Advisory boards are more common in private companies compared to public ones. These are composed of external experts who offer insight into industry-specific issues.

Duties of a private board

Private boards are responsible for the following duties:

• Fiduciary duties: Acting in the best interests of the company and shareholders by making informed decisions.
• Strategic oversight: Creating and reviewing the company’s strategic plans.
• Financial oversight: Monitoring the integrity of financial reports. Reviewing and approving financial statements and budgets.
• Risk management: Finding, assessing and managing potential risks, ensuring compliance.
• Good governance: Creating and maintaining governance policies, ensuring compliance with the prevailing laws and ethical standards.
• Succession planning: Developing succession plans for key positions, such as the CEO.
• Shareholder communication: Communicating with shareholders about company performance and addressing their concerns.
• Crisis management: Creating and reviewing crisis management plans, offering guidance during significant incidents.

Who holds a private board accountable?

Private companies tend to have a concentrated ownership structure compared to public companies. This means that a small group of individuals can hold significant portions of company shares.

These shareholders have a vested interest in the company’s performance, holding the board of directors accountable in case they steer away from the company’s mission.