Chairman (Chair)

Chairman (Chair)

The Chairman (increasingly referred to as the Chair or Chairperson in modern Australian governance) is the presiding officer of a company’s [Board of Directors] and the highest-ranking officer in the boardroom.

While legally viewed as "first among equals," the Chair holds a pivotal leadership role responsible for ensuring the board functions effectively, meets its legal obligations under the Corporations Act 2001 (Cth), and provides strategic oversight to the organisation. The Chair acts as the primary liaison between the board and the management team, specifically the [Chief Executive Officer (CEO)].

In the Australian corporate landscape, the role has evolved significantly. It has moved beyond a purely procedural role—managing meetings—to one of strategic leadership, culture setting, and stakeholder engagement.

Evolution of Terminology: Chairman vs. Chair

Historically, the term "Chairman" was universally used to denote the head of the board. However, in recent decades, Australian business culture has shifted toward gender-neutral terminology.

The Australian Institute of Company Directors (AICD) and the ASX Corporate Governance Council largely favour the term Chair. While "Chairman" remains legally valid and is still used in many company constitutions, "Chair" is now the standard preference for ASX-listed entities, government bodies, and non-profits to reflect diversity and inclusion.

Regardless of the title used—Chairman, Chairwoman, Chairperson, or Chair—the legal duties and responsibilities associated with the office remain identical.

The Role of the Chair in Australia

The Chair is responsible for leadership of the board and for the efficient organisation and conduct of the board's function. In Australia, this role is distinct from that of the CEO, and best practice guidelines (such as the ASX Corporate Governance Principles) strongly recommend that the same individual does not hold both positions simultaneously to ensure a clear separation of power.

1. Leadership and Board Effectiveness

The Chair’s primary duty is to lead the board. This involves facilitating constructive discussion, ensuring all directors contribute effectively, and managing the board’s time to focus on critical strategic issues rather than administrative minutiae. A skilled Chair cultivates a boardroom culture of trust, transparency, and open dissent, allowing for robust debate before a consensus is reached.

2. The Chair-CEO Relationship

The relationship between the Chair and the CEO is often described as the most critical in the organisation. The Chair acts as a mentor, sounding board, and, when necessary, a critic to the CEO.

  • Support: The Chair supports the CEO in implementing the board's strategy.

  • Accountability: The Chair ensures the CEO is accountable to the board for the company's performance.

  • Liaison: The Chair serves as the conduit for information between the board and management, preventing the board from bypassing the CEO and interfering in daily operations.

3. Governance and Compliance

The Chair sets the tone for [Corporate Governance]. They must ensure the company complies with its own [Constitution], the Corporations Act, and, for listed entities, the ASX Listing Rules. This includes overseeing the induction of new directors, managing conflicts of interest, and ensuring the board acts in the best interests of the corporation.

Key Responsibilities and Duties

While specific duties can vary based on the organisation’s size and constitution, the core responsibilities of an Australian Chair typically include:

Meeting Management

The Chair is the custodian of the [Board Meeting]. Their procedural duties include:

  • Setting the Agenda: Working with the [Company Secretary] and CEO to build a [Board Agenda] that prioritises strategy and risk over routine reporting.

  • Facilitating Debate: Ensuring discussions are forward-looking and that no single director dominates the conversation.

  • Signing Minutes: Under Section 251A of the Corporations Act 2001, the Chair must sign the [Meeting Minutes] to certify them as a true and correct record of proceedings.

  • Casting Vote: If the company constitution allows, the Chair may have a "casting vote" to break a deadlock on board resolutions.

Strategic Oversight

The Chair ensures the board plays a full and active role in the determination of the company’s strategic direction. They act as the guardian of the organisation's vision, ensuring that management remains focused on long-term value creation rather than short-term targets.

Performance and Succession

The Chair leads the process of evaluating the performance of the board, its committees, and individual directors. They are also responsible for CEO succession planning—ensuring there is a pipeline of talent ready to lead the organisation—and for the recruitment of new [Non-Executive Directors].

Stakeholder Representation

The Chair is the "face" of the board to shareholders and external stakeholders. They typically chair the Annual General Meeting (AGM), where they present the annual report and answer questions from shareholders regarding the company's direction and governance.

Legal Framework in Australia

Unlike the role of a director, which has clear statutory duties, the Corporations Act 2001 provides very few specific definitions for the role of the Chair.

Most of the Chair’s authority is derived from the company’s Constitution (or Articles of Association).

  • Appointment: The constitution usually outlines how the Chair is elected (typically by the directors themselves).

  • Powers: It dictates whether the Chair has a casting vote and their specific powers regarding the conduct of general meetings.

However, case law in Australia suggests that the Chair has a higher duty of care than other directors in certain contexts. Courts have held that because the Chair controls the flow of information to the board, they have a specific responsibility to ensure directors are properly informed.

The ASX Corporate Governance Principles

For public companies, the ASX Corporate Governance Council’s Principles and Recommendations (4th Edition) provide the gold standard.

  • Recommendation 2.5: The Chair of the board of a listed entity should be an independent director and, in particular, should not be the same person as the CEO.

Executive vs. Non-Executive Chair

Understanding the distinction between an Executive and Non-Executive Chair is vital for assessing board independence.

Non-Executive Chair (Independent)

This is the preferred model in Australia. An Independent Non-Executive Chair is not an employee of the company and has no material business relationship with it. This independence allows them to provide objective oversight of the executive team and protects the interests of shareholders.

Executive Chair

An Executive Chair holds a full-time management position within the company (often combining the role with CEO duties). While this can allow for rapid decision-making, it is generally viewed as poor governance practice for public companies because it concentrates too much power in one individual and diminishes the board's ability to hold management accountable.

Essential Skills and Attributes

A modern Chair requires a sophisticated skill set that goes beyond business acumen.

  • Facilitation Skills: The ability to manage diverse personalities and steer complex debates toward a decision.

  • Emotional Intelligence (EQ): Reading the room, sensing tension, and managing conflict between directors or between the board and the CEO.

  • Strategic Thinking: The ability to elevate the conversation from operational detail to strategic horizons.

  • Integrity: Serving as the moral compass of the organisation.

How BoardCloud Supports the Chair

For a Chair to be effective, they require accurate, timely, and secure information. BoardCloud’s board management software is designed to empower the Chair by streamlining the governance process.

Efficient Agenda Construction

The Chair often collaborates with the Company Secretary to set the meeting flow. BoardCloud’s Agenda Builder allows for drag-and-drop organisation of agenda items, ensuring the most critical strategic topics are placed where directors are freshest.

Secure Board Packs

One of the Chair's key duties is ensuring directors are well-informed. BoardCloud ensures that [Board Packs] are distributed securely and instantly. This removes the "information asymmetry" risk, ensuring all directors have the same data well before the meeting starts.

AI-Assisted Minutes and Governance

To assist with the legal duty of signing accurate records, BoardCloud offers AI-powered transcription and minutes generation. This ensures that the Chair signs off on [Minutes] that accurately reflect the decisions and actions agreed upon, reducing legal risk and administrative burden.

Active Meeting Management

During the meeting, BoardCloud’s Active Agenda helps the Chair keep the meeting on track. It allows the Chair to monitor time spent on each item, ensuring the meeting finishes on time—a key metric of a respectful and efficient Chair.

Frequently Asked Questions (FAQ)

1. Is the Chair the same as the CEO?

No. In Australia, the Chair leads the [Board of Directors] (governance), while the CEO leads the management team (operations). While it is legally possible for one person to hold both roles (Executive Chairman), the ASX Corporate Governance Principles recommend keeping them separate to ensure proper checks and balances.

2. Does the Chair have a casting vote in Australia?

It depends on the company’s [Constitution]. The Corporations Act does not automatically grant a casting vote to the Chair. Many modern constitutions remove the casting vote to encourage consensus decision-making, but it is still common in older companies or smaller proprietary companies.

3. How is the Chair appointed?

The Chair is usually elected by the directors from among their own number. The specific process is outlined in the company's Constitution. In some cases, particularly for government boards, the Chair may be appointed directly by a Minister or shareholder group.

 

This glossary entry is for informational purposes only and does not constitute legal advice. For specific legal queries regarding the Corporations Act 2001, please consult a legal professional.