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 ?
The wannabe CEO: This is the board member who thinks they know better than the CEO or the current senior management team and is constantly second-guessing them and sticking his or her nose in where it does not belong.
To increase the visibility of potential African American board members, the ELC is also in partnership with the National Association of Corporate Directors, and works toward registering members on the association's database--one of the primary sources companies use to seek eligible candidates in particular skill sets.
Do you take measures to filter what board members might learn from executives several levels below you?
We want the Natural History Museum to make its permanent residence in Exposition Park,'' said board member Bill Chadwick.
But anything else--like a major re-do to the kitchen or the bathroom--is a red flag for most co-op board members, who will probably envision months of noisy, dusty construction work with laborers traipsing in and out of the building.
sentencing guidelines that were issued late last year may offer a lot of help to board members and senior executives," suggests Randy Nornes, a managing director at Aon Risk Services, the Chicago-based consulting arm of insurance brokerage Aon Corp.
She went on retreats with board members in order to build bridges between individuals, eliminating grudges that had built up through long histories of conflict and unresolved issues.
MERLOT's initial online communities represented four academic disciplines, Biology, Business, Physics, and Teacher Education, with 12 faculty members serving as Editorial Board members from each discipline.
Most board members view growth as both a major challenge and an opportunity.
Are junior board members mentored and oriented so that they can understand the institution's unwritten norms and know what is expected of them?
Some board members think they are protected by legislation covering people acting in a volunteer capacity for NPOs.
The hospital board members want the new hospital to become a health centre where they can focus on progressive services and progressive thinking.