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 ?
In the event that a board member's holding in the company on the date of the AGM should exceed 1% of the total share capital, the fee shall be paid fully in cash.
For now, board members get the same insurance as a full-time county employee, which comes with taxpayers' picking up more than 60 percent of the cost.
The board member responded, 'I am 20 years your senior.
When contacted, Mhd Amin said that all BN board members resigned voluntarily.
The New Governance Rules added new provisions that did not exist in the Repealed Governance Rules regarding the election of the Chairman from amongst the Board Members (by way of cumulative voting), prohibition to combine between the position of the Chairman and General Manager, the right to elect the General Manager from amongst the Board Members and the right to form committees from amongst the Board Members to monitor the progress of the Company's operations and to ensure the implementation of the Board's resolutions.
But nonprofit board members are intended to lead the organization, along with the CEO, and preserving assets for beneficiaries is never in the equation.
The utility spent about $32,600 on average for each board member this year, including all taxes paid on board members' meeting and medical stipends.
THE North East Local Enterprise Partnership (NELEP) is on the look out for a new board member after pharmaceutical entrepreneur Fiona Cruickshank stepped down.
For this article, Credit Union Times compiled charts that list three of the largest state-chartered credit unions from each state that pay their board members. The charts also review how these credit unions performed financially in 2012 compared to their peers to see if they tended to perform any better, any worse or about the same as credit unions in their peer group, the vast majority of which do not pay their board members.
During the agricultural season, meetings are rotated to take place in farmworker locations so that all board members can become familiar with this special population.
Writing in a conversational style with a sense of humor, veteran school board member Mayer (psychology and education, U.