1.

The control role

The control roles involve the directors fiduciary duties of monitoring management on
behalf of shareholders. Board of Directors responsibilities in this role include appointing and
dismissing the Chief Executive Officer (CEO) and other top executives, deciding executives
remuneration and monitoring managers to ensure that shareholders interests are protected.
From legal perspective, the control role is the primary purpose of the board of directors. The
Directors owe fiduciary responsibility to the corporation and shareholders. Fiduciary duties
include the duty of care and duty of loyalty. Fiduciary duties requires the directors to make
every attempt to be well informed before they make any decisions, to act in good faith and
the best interest of the shareholders and to be independent in their decisions. From financial
perspective, the control role is grounded in agency theory i.e. the directors source of power is
derived from shareholders. Their role in this regard is as the representative of the
shareholders (the principals) to monitor the managerial behaviour of the executive of the firm
with the objective of reducing operational costs and maximizing shareholder value (Robert w.
Kolb, encyclopedia of business ethics and society.p. 476).
2. The service role
In their service role, the Directors advise and provide guidance to the CEO and top
managers in managerial and administrative issues. Among the most important service role is
advising the management in the determination of corporate strategy of the corporation
(Robert w. Kolb, encyclopedia of business ethics and society.p. 476).
3. The resource role
The resource role refers to the directors assistance in the acquisition of critical resources for
the company. The board of directors is often seen as a key organizational body that could
provide critical resources for the company, protect the company from environmental
uncertainties and reduce transactions costs in managing external relationships (through their
contacts and networks in the industry).This is particularly true with the regards to nonexecutive, outside directors, who plays an important role in providing (1) specific resources
otherwise unavailable to management (e.g. financial funds, information etc), (2) access to
external institutions and influential organizations (e.g. regulatory bodies, consulting firms and
international organizations), and (3) legitimacy (reputation by having a prominent person as
director in the company). As capital is one of the key resources, companies often use
interlocking directorate with financial institutions (i.e. appointing as their non executive
directors the persons who already hold directorship in financial institutions and banking
companies) as a way to facilitate access to cash. For example, small and entrepreneurial
companies, in which access to critical resources is