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 ?
Most recently at McLaren Macomb, the parent company of Karmanos Cancer Institute, Dalmia has served as corporate director of Radiation Services as well as chief medical physicist and director of Radiation Oncology.
The other remaining corporate directors are Arthur Owen and Gwen Carrington.
Mr Ross said: "I am pleased to have been formally offered the role as corporate director here in Leicestershire and Warwickshire.
Also earning total remuneration of more than PS100,000 were the corporate director for resources, corporate director for adults, wellbeing and health, the corporate director for children and young people's services, the corporate director for neighbourhood services, the corporate director for regeneration and economic development, the assistant chief executive, the monitoring officer and 14 unknown staff members.
Department of Health and Human Services has worked closely with the Health Care Compliance Association and the American Health Lawyers Association to develop criteria to assist corporate directors and officers in their roles of corporate responsibility.
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).
Hilary Hendy, executive director in WDA's international division, will become corporate director responsible for all WDA support to larger companies, including inward investment.
Prior to his present assignment, he was corporate director of government cost accounting and compliance at the Northrop Grumman Corporation.
According to FCE, Petty previously served in such positions as president and CEO of Canadian telecommunications firm Telus Corporation; vice president of global business services for AT&T; chairman of the board of World Partners; and corporate director of Canada-based CAE Incorporated.
According to Corporate Director of Human Resources and Development Tricia Jarrell, "GHI is committed to lifelong learning, not only for our staff but for our residents, as well.
Southington, Connecticut-based Athena Health Care Systems has brought in Patricia Henriksen as corporate director of specialty services marketing.
For employee wages, these taxes are often referred to as FICA (Federal Insurance Contribution Act) taxes; for self-employment income (such as corporate director fees), they are known as SECA (Self-Employment Contributions Act) taxes.

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