Board of Directors

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Board of Directors

A group of people comprising the governing body of a corporation.

The shareholders of a corporation hold an election to choose people who have been nominated to direct or manage the corporation as a board. In the past nearly all states required that at least three directors run a corporation. The laws have changed, however, since many corporations have only one or two shareholders and therefore require only one or two directors to serve on the board.

Directors are elected at the first annual meeting of shareholders and at each successive annual meeting for one-year terms, unless they are divided into classes. In a corporation that divides its directors into classes, called a classified board, conditions are often imposed concerning the minimum size of the board, the minimum number of directors to be elected annually, and the maximum number of classes or maximum terms. The purpose of a classified board, which is expressly permitted by most statutes, is to make takeover attempts more difficult by staggering the terms of the directors.

Removal of a director during the course of his or her term may occur for cause by shareholders or by the board itself if there is a provision in the bylaws or articles of incorporation that confers such power upon them. The removal of a director for cause is reviewable by a court. Many jurisdictions have put into effect statutes that concern the removal of directors with or without cause.

The functions of directors involve a fiduciary duty to the corporation. Directors are in control of others' property and their powers are derived primarily from statute.

Directors are responsible for determining and executing corporate policy. For example, they make decisions regarding supervision of the entire enterprise and regarding products and services.

Liabilities of directors extend to both their individual and joint actions. A director who commits a tort against his or her corporation can be held personally liable.

Directors are bound by certain duties such as the duty to act within the scope of their authority and to exercise due care in the performance of their corporate tasks.

board of directors

n. the policy managers of a corporation or organization elected by the shareholders or members. The Board in turn chooses the officers of the corporation, sets basic policy, and is responsible to the shareholders. In small corporations there are usually only three directors. In larger corporations board members provide illustrious names, but the company is often run by the officers and middle-management who have the expertise. (See: corporation)

See: management, supervision
References in periodicals archive ?
Brenda Davis says her seven years as a board member have taught her to plan, organize and manage time better--all useful skills in her full-time job as director of the Martin Luther King Action Center, a community services provider in Columbus, Ohio.
Resolution regarding the number of board members and deputy board members 13.
The only reason that these initiatives failed was because this very group made sure they would fail,'' said SAG board member Amy Aquino.
But I think it's imperative that whether I call the board member or the board member calls me, I inform the CEO about it afterward.
Unethical board members and vendors can also lead unknowledgeable boards and inexperienced managers down illegal paths.
One board member told pollsters, "Those who feel their children need to spend their school day in a religious atmosphere should send their children to private school at their own expense.
He is just completing his three-year term representing JPD on the NRA Board, and serves locally as a Board Member of the South Dakota Coalition of Citizens with Disabilities.
A board member might not like the placement of a bulletin board or location of a new books display, but these are management decisions.
Further, training for board members may be deficient or absent altogether.
Current ACA Service: member, ACA National Strategic Planning Committee; board member and chairperson of development committee, New England Section; member, New England Section education/conference program committees.
So, aside from personal virtue, there's often no incentive whatsoever for a board member to act responsibly.
But to me, it's all worth it, for we board members are watching over and enhancing the values of our most important asset--our homes.