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 ?
WASHINGTON, April 24, 2015 /PRNewswire/ -- The National Association of Corporate Directors (NACD) is pleased to announce the addition of six new speakers to the roster of its 2015 Strategy & Risk Forum, taking place in San Diego, California, on May 12 and 13.
20(th) Annual National Association of Corporate Director Awards Marks First Time Awards Are Selected in Four Categories: Public, Private, Not-for-Profit, and Lifetime Achievement
More than 100 corporate directors convened to hear experts in the fields of economics and geopolitics discuss current and emerging trends.
The Professional Director Certification is available ONLY to American College of Corporate Directors members who are also members of the Corporate Directors Group.
is a four-star retired Air Force General and independent corporate director.
Hilary Hendy, executive director in WDA's international division, will become corporate director responsible for all WDA support to larger companies, including inward investment.
Mark Finucane, aged 44, has been made area corporate director for Warwickshire, and he will be responsible for leading the region's team - which is one of the largest in the UK.
Total compensation for Canada's corporate directors increased 32% between 2001 and 2003, according to a new study of the proxy disclosure of companies in the S & P/TSX Composite, conducted by Mercer Human Resource Consulting in association with the Institute of Corporate Directors (ICD).
Richard Higgs has become the new corporate director (development services), having beaten more than 40 candidates to the job, and his role will include overseeing highways projects such as the new Rugeley bypass.
The authority has only advertised internally for a staff member to join the acting chief executive Tom Morgan and corporate director Neelam Bhardwaja in the vacant role of corporate director (built environment) created after Steven Phillips left to become chief executive in Neath Port Talbot.
BARCLAYS has appointed Keith Ross as its corporate director for Leicestershire and Warwickshire.
DENBIGHSHIRE'S under fire education department has appointed a new Corporate Director.

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