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 ?
He has held executive management and leadership positions for public and private companies, and has served on a variety of not-for-profit charitable, private and public company boards of directors for more than 30 years.
For a complete list of the members of the boards of directors of the Federal Reserve Bank of Cleveland and its branches, see www.
Rodgers retired after more than 20 years of combined service as a member of the boards of directors of AmerisourceBergen and Bergen Brunswig.
His experience serving on the boards of directors of Fortune 500 companies provides a valuable new perspective, and we are all looking forward to working with him," Crown added.
The stock options are offered to the personnel of the Proha Group in Finland and abroad including the certain members of boards of directors of the Proha Group companies as part of the Group's employee incentive program.
The Seattle Chapter of Forum for Women Entrepreneurs (FWE), a non-profit organization supporting entrepreneurial women in technology and life science businesses, will host a high-profile panel discussion, "Building World-Class Boards of Directors and Advisors," on October 11 from 6:30pm-9: pm at the Bellevue Embassy Suites.