Common Questions on Running a Company

Management runs the business day to day. The board appoints and oversees the chief executive, approves strategy, budgets and major transactions, and makes sure risk and financial reporting are properly controlled.

A non-executive director does not work in the business full time. They attend board and committee meetings, challenge management's proposals, bring outside experience and help oversee pay, audit and succession.

Separating them prevents one person from both running the company and supervising how it is run. The Cadbury Report of 1992 recommended the split, and it is now standard for UK listed companies.

Shareholders receive the annual report, vote on resolutions such as electing directors, appointing auditors and approving pay policy, and can question the board.

Finance issues planning assumptions, departments submit plans, executives negotiate trade-offs and the board approves the final budget before the financial year begins. Results are then tracked against it monthly.

Profit records revenue when earned and costs when incurred. Cash flow records money actually moving in and out. Timing gaps in working capital mean a profitable company can still run short of cash.

Under codes such as the UK Corporate Governance Code, companies either follow each provision or publicly explain why they have chosen a different approach.

It varies, but many boards meet somewhere between six and ten times a year, with committees meeting in between and extra meetings called for urgent matters.

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