Board of Directors’ Duties
The Board’s duties are generally set forth in the corporation’s
bylaws, which usually indicate the number of members on the Board, how meetings should be conducted, how to fill in vacancies on the Board, etc. In addition, a Board of Directors has
fiduciary duties to the shareholders of the corporation, which include the duties of care and loyalty. In other words, if a director on the Board does not act in good faith or with a certain standard of care in making his or her decisions, that director can be held civilly or criminally liable.
Overall, the Board makes the top-level policy decisions. The Board then usually elects officers to run and implement the day-to-day operations of the corporation. With that said, let’s take a look at some of the Board’s main duties.
The duties of the Board of Directors generally include:
- Setting the main policies for a company
- Maintaining accountability to the shareholders
- E.g. giving reports on the success and/or failures of the corporation
- Hiring, firing, promoting, and setting the compensation structures for the officers of the corporation
- Monitoring the progress of the corporation
NOTE: A board of directors is not an advisory board. Advisory boards are often hired by corporations for advice on certain matters. However, advisory boards do not have any authority to make the final decision or vote on corporate matters.
Next, we’ll take a look at how the Board of Directors’ elections work.