Duties of a Board of Directors
The individuals who are selected to be on the board of directors of a corporation have overall responsibility for the activities of the corporation. The board acts on behalf of the shareholders to make overall policy decisions and provide oversight. A corporate board has great power and also great responsibility. Specific duties of the board of directors and of individual board members, committees, and officers are set by the corporate bylaws.
Here are the primary duties of a corporate board:
- Fiduciary responsibility
Corporate board members have a fiduciary responsibility to care for the finances and legal requirements of the corporation. They must act in good faith and with a reasonable degree of care, and they must not have any conflicts of interest. That is, the interests of the company must take precedence over personal interests of individual board members.
- Mission and Vision
Board members are responsible for setting the mission of the company and assuring that all actions are related to and adhere to that mission. The board can change the mission, but only after careful deliberation.
Corporate boards of directors do not participate in day-to-day decision-making; instead, they set overall policy, based on the corporate mission and vision, and they exercise an oversight function, reviewing the actions of corporate officers and executives.
- Annual Meeting
At the annual meeting of the corporation, the board announces the annual dividend, oversees election of corporate board members, elects or appoints officers and key executives, and amends the bylaws, if necessary.
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