Responsibilities of Corporate Directors and Officers
Boards of directors and officers of corporations have distinct functions. Generally, directors set corporate policy while officers carry out that policy.
Corporate Director Responsibilities
Members of the corporation’s board of directors manage the corporation principally through their power to appoint corporate officers. Normally, the board of directors decides what corporate stock will be issued, what responsibilities will be carried out by particular corporate officers and how those officers will be compensated, what action will be taken regarding fixed corporate assets such as real estate, and whether loans will be made or accepted by the corporation.
Directors take action through meetings of the board. Such meetings normally must occur at least annually although meetings without the physical presence of directors may be authorized by corporate bylaws.
Directors owe a duty of loyalty to the corporation. They are not agents of shareholders. So long as they exercise good faith business judgment, they are not duty-bound to accede to the wishes of majority shareholders. However, shareholders are entitled to remove directors even without cause in most jurisdictions and shareholders are entitled to accept or reject board of director actions that would cause fundamental changes in the corporation such as a merger or a significant disposition of corporate assets.
Corporate Officer Responsibilities
Corporate officer responsibilities are set by statute and by the board of directors appointing the officer and delegating duties to the officer. Generally, corporate officers are responsible for the day-to-day operations of the corporation within statutory parameters for corporate conduct. Corporate officers (and employees) are agents of their corporation and thus owe a duty of loyalty to the corporation.
Titles and duties of corporate officers usually are found in the corporate bylaws. Typically, officers of a corporation include a president or chief operating officer, a treasurer or chief financial officer to handle finances, and a secretary responsible for corporate records.
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