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)

References in periodicals archive ?
The five-member board - which serves rural communities bordering the Eugene- Springfield metropolitan area - previously proposed to spend, on average, just over $35,000 per board member next year.
It is hoped that the new board member will be in place by autumn 2013.
Hodges of Associated CU also said the guidance and coaching he received from a board member opened his eyes to the importance of political activism, advancing the credit union's interests and growth.
Julio Paez is a current board member at Valley-Wide and his profession is technology director.
"The new board member needs to sit down with the board chair and the general manager so they can explain what the plan for the company is and [discuss] what specific attributes the new member brings to the table," he said, explaining that this could be technical expertise, relationships with other organizations and experience in specific industries.
To determine levels of normative commitment, the survey posed questions like "it would unethical to betray this co-op" and "it would be wrong to leave the board before his or her term expires because of loyalty to the co-op." High ratings on the normative commitment scale means a board member is committed to and remains on the co-op board because of feelings of obligation and loyalty.
Wood noted that a board member must be willing to temper their individual viewpoints with the overall needs of the organization.
The census yielded a two-part report; the first, released in 2005, presented the numbers and identified all of the African American board members. This year, the ELC's Institute for Leadership Development & Research released part two: Implications and Recommendations of the 2004 Census of African Americans on Boards of Directors.
A couple of board members had pulled me aside at the time and said, "Lewis, how much do you believe in this?" I said, "Are you kidding me?
LWVTX Budget Committee, 1994-2006; treasurer, 1997-2003; Board member, 2003-06.
Both Lynne Weber and another board member, former choreographer Senta Driver, are working tirelessly to discover what went wrong and to chart a course for the future.
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.