How many committees should a board have?

Bothwell P. Nyajeka

ONE of the most com­mon questions I receive when advising boards is how many board committees they should have.

The answer surprises many di­rectors. There is no ideal number.

A board should not establish committees simply because anoth­er company has them, because they are fashionable, or because direc­tors want more meetings to attend. Every committee should exist to improve governance by enabling the board to discharge its responsi­bilities more effectively.

A committee is an extension of the board. The board remains collectively accountable for every decision made by its committees. Therefore, a committee should only be established where a specif­ic oversight responsibility cannot be adequately discharged by either the full board or an existing com­mittee.

When designing a board com­mittee structure, boards should be­gin by identifying the committees that are mandatory.

In Zimbabwe, there is no single piece of legislation that prescribes committee structures for every organisation. The committees re­quired depend on the sector in which the organisation operates.

Public entities are governed by the Public Entities Corporate Gov­ernance Act. Private companies are governed by the Companies and Other Business Entities Act. Banks, bank holding companies and deposit-taking microfinance institutions must comply with gov­ernance guidelines issued by the Reserve Bank of Zimbabwe. Insur­ance companies and pension funds are regulated by the Insurance and Pensions Commission (IPEC). As­set managers fall under the gover­nance framework of the Securities and Exchange Commission of Zimbabwe (SECZ).

These Acts and regulatory guidelines carry legal force and the board has limited discretion because compliance is mandatory. Before determining its commit­tee structure, every board should obtain appropriate legal advice to ensure it understands the regula­tory requirements applicable to its organisation.

Once the mandatory committees have been established, the board can consider whether additional committees are necessary. This is where the National Code on Cor­porate Governance (ZimCode) be­comes particularly useful.

Unlike legislation, ZimCode is principles-based. It adopts an “ap­ply and explain” approach rath­er than a mandatory one. While it recognises the importance of committees such as Audit, Risk, Remuneration and Nominations, it deliberately allows boards the flexibility to design governance structures appropriate to their own circumstances.

Boards today oversee far more than financial reporting and com­pliance. They are also expected to oversee strategy execution, ethics, organisational culture, cybersecuri­ty, digital transformation, artificial intelligence, environmental, social and governance (ESG) issues, suc­cession planning, stakeholder en­gagement and business resilience. As these responsibilities increase, so does the pressure on board agen­das.

Many boards begin every meet­ing intending to discuss strategy, only to spend most of their time dealing with operational crises, regulatory matters and immediate business challenges. By the time routine business has been conclud­ed, strategy is postponed to the next meeting.

To resolve this bottleneck, for­ward thinking organisations are delegating deeper strategic focus to specialised board committees.

One committee that is becoming increasingly relevant in Zimbabwe corporates is the Strategy Com­mittee. This committee provides dedicated oversight over strategy execution between board meetings.

Such a committee can regularly monitor strategic initiatives, capital allocation, competitive positioning, strategic risks and implementation milestones before reporting back to the full board. This ensures that strategy remains a standing gover­nance priority rather than an agen­da item continually displaced by operational issues.

However, strategy is not the only area demanding deep, unin­terrupted focus; rapid technologi­cal advancement is also changing the rules of corporate governance. Cybersecurity, artificial intelli­gence, digital transformation and ESG reporting all require specialist knowledge that many boards do not yet possess. An effective way of addressing these complex new challenges is through specialised committees.

Crucially, these specialised com­mittees offer a flexibility that the full board lacks. Unlike the board itself, committee membership can often include independent experts, advisors or legal counsel who are not directors, thereby strengthen­ing the quality of oversight while enabling the board to make more informed decisions.

As organisations expand into new markets, introduce new prod­ucts or digitise their operations, these specialised committees be­come increasingly valuable.

From my experience, sitting on boards, one of the most sensi­tive governance challenges facing boards in Zimbabwe today is the management of conflicts of inter­est.

These matters frequently in­volve influential shareholders, con­nected parties or senior executives. They are often the issues that cause boards the greatest discomfort be­cause the decisions required can af­fect relationships, reputations and shareholder confidence.

Some boards have responded by establishing Ethics Committees comprising independent directors together with external legal coun­sel who provide objective opinions on complex related party transac­tions and governance matters. Such committees help protect not only the company but also the integrity of the board itself.

An increasingly popular gover­nance practice is the use of ad hoc committees. Rather than creating permanent committees for every emerging issue, boards establish temporary committees to address specific matters such as acquisi­tions, major litigation, corporate re­structuring or investigations. Once the assignment has been complet­ed, the committee is dissolved. This approach provides flexibility while avoiding unnecessary bureaucracy.

Before establishing any addi­tional committee, boards should work through four important steps.

First, undertake a governance gap analysis. Map every respon­sibility assigned to the board and determine whether any important areas are falling through the cracks. Annual board evaluations often re­veal these gaps.

Second, assess the board’s ca­pacity. Does the board have suffi­cient time, expertise and skills to oversee the issue effectively? If not, should directors receive addi­tional training, should external ad­visors be engaged, or is a dedicated committee warranted?

Third, perform a cost-bene­fit analysis. Every committee in­creases governance costs through additional meetings, reports and administrative support. Those costs should be justified by improved oversight and better decision-mak­ing.

Finally, if a new committee is established, develop a clear com­mittee charter defining its mandate, authority, reporting lines, member­ship and responsibilities. Without a well-defined charter, committees risk duplicating work already being undertaken elsewhere.

Good governance is not mea­sured by the number of committees a board has, but by whether those committees help the board exercise better judgement, strengthen ac­countability and create sustainable long-term shareholder value.

l Nyajeka is a business consultant and board advisor. He has vast ex­perience as a corporate executive and has sat on various boards in Zimbabwe, Botswana, South Af­rica and Uganda. He is currently chairman of ACR Solutions and is also a seasoned trainer and facili­tator for the Institute of Directors Zimbabwe (IoDZ). For business consulting, board advisory and executive coaching services, email him on: bnyajeka@acr4solutions. com