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 ?
Jaime Paz - board member, Social Housing Finance Corp.
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.
The census yielded a two-part report; the first, released in 2005, presented the numbers and identified all of the African American board members.
If I were a board member and thought that the CEO was pre-screening what people should say, I wouldn't like that very much.
Member of Minnesota Supreme Court Advisory Committee reviewing the Code of Judicial Conduct and Rules of the Board on Judicial Standards; KidsVoting Minnesota Board member, 1995-present.
A long interview may signify that board members are not fully satisfied with the information supplied in the board package.
From his seat at a comfortable from his former board, Sam Stringfield offers advice for the would-be board member.
The most common modus operandi is that in which one board member writes an initial draft of a review and then his/her co-reviewer(s) make additions, modifications, etc.
Incoming board member Jenni Brockman cites another success: "Developing new products and services that bring value to the average member, including affordable webinars on highly topical issues and the revamped CW and CW Bulletin.
Each board member should check whether his or her homeowner's insurance covers NPO board liability.