The birth of boards – and who we have to thank

Monty Python tragics will fondly remember the ‘What have the Romans ever done for us?’ moment in ‘The Life of Brian’ and the same can be asked of those we probably love to hate the most – the British.

They gave us – in no particular order of importance – things like cricket, the steam locomotive, the jet engine, the telephone, the television, the postage stamp, the smallpox vaccine, bangers and mash…the list goes on.

And we also have them to thank – or curse – for giving us boards.

Thank, in the vast majority of cases because boards have generally stood the test of time and impacted favourably on our civil society…curse, in the rare cases when they’re poor and serve as little more than a debilitating hand-break on progress and development.

Modern-day boards have their origins in the first limited liability legislation passed in the mid-1800s. Before then, to create a company, you had to get Parliament to pass a particular piece of legislation just for you to be created. It was both costly and cumbersome.

Then the Industrial Revolution arrived…and with it, huge change, a flurry of inventions and a desire to commercialise them, many of which were risky at best and required more funding.

That brought about the first Companies Act, under which the shareholders had limited liability. In other words, if they invested £10 in the company and it subsequently went broke, creditors could sue the shareholders only for the amount they’d agreed to invest in the company.

Suddenly, it was so much easier. Suddenly, there was a line of eager investors banging on the door and keen to get a slice of the action. But this also meant that there were now lots of little bits of money from many different people, the majority of whom had no knowledge or skills relevant to the particular enterprise.

They just wanted to invest.

This brought its own challenges – with hordes of owners, decision-making would be unwieldy, if not impossible.

So boards came into being, to put the decision-making in the hands of a few, hopefully sufficiently skilled to fulfil their duties and steer the company to prosperity.

Of course, there’s another reason behind their creation…and it’s so quintessentially British!

If you could entice someone of a high profile and great influence to serve on your board, a Lord Muck, if you will, he could open doors and access powerful people, to the distinct advantage of the company he represented.

Boards have gone on to stand the test of time, they’ve been exported to Britain’s many far-flung colonies and have gone on to gain a foothold across much of the world.

And that, more than anything, stands as testament to the fact that when they’re good – and most are – they’re truly valuable and greatly needed…and can stand proudly alongside the likes of the jet engine and the telephone on Britain’s pantheon of great inventions.

Kate Costello

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