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 ?
Langbo, 62, chairman of the board of the Kellogg Co.
Kangas currently serves as the Non-Executive Chairman of the Board for Tenet Healthcare Corporation and Oncology Therapeutics Networks and a board member at Eclipsys Corporation, Electronic Data Systems and Hovnanian Enterprises, Inc.
He is vice chairman of the Board of Trustees of Drew University and a member of the board and a past chairman of the board of Junior Achievement Worldwide.
Haley served as a director and chairman of the board of the Pittsburgh Office of the Federal Reserve Bank of Cleveland from 2003 to 2006.
McCranie joined Virage Logic as chairman of the board in August 2003 and became executive chairman in March 2006.
As Chairman of the Board and CEO of Accuride, I will continue to drive Accuride's strategic plan calling for further optimization of our facilities and pursuit of global expansion," said Mr.
Mr Conny Karlsson, 51, is today chairman of the boards of SEB Investment Management AB and Zodiak Television AB.
Moore made terrific progress and achieved great success during Bill Kaplan's tenure as Chairman of the Board.
McCabe currently serves as Chairman of the Board for Pinnacle Financial Partners, the largest Nashville, Tenn.
NYSE:OFG) announced today that JosE[umlaut] Enrique FernEindez, who oversaw the Group's growth over the past 19 years into a leading financial services company, has retired as Chairman of the Board of Directors in line with a transition he started four years ago to put Oriental in the hands of a new generation of bankers and executives.
Patrick McFadden, presently Lead Director of UIL's Board of Directors, as the Non-Executive Chairman of the Board of Directors, effective October 1, 2006.
Allison is the President, Chief Executive Officer, and Chairman of the Board of Directors of Comstock Resources, Inc.

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