Board of Directors

One of the first steps of forming a new corporation is naming the members of the board of directors. These directors are often identified in the company's bylaws as well as their Articles of Incorporation and are one of the primary tasks of the incorporator.

After the corporation has been running, the board of directors will then be elected by the shareholders at the annual meetings. As the name would suggest, a board of director's purpose is to direct corporate affairs and guide the company's business path.

It is the board of directors that ultimately has the legal responsibility for the actions of the corporations, its subsidiaries, employees, officers, and agents. They serve as a valuable source of advice that is there to challenge and discipline the management. The corporate director has duties and responsibilities including:

  • Acting in the best interest of the company.
  • Acting with loyalty to both the shareholders and the corporation.
  • Participation in the regular board of directors meetings.
  • Approving corporate transactions and activities on behalf of the corporation, such as entering into contracts, electing new officers, purchasing and selling assets, and approving corporate policies.
  • Amending the corporate bylaws as well as the articles of incorporation.

The corporation's Articles of Incorporation and bylaws will state the number of members elected to a board of directors; this number is largely dependent on the size of the company and all of its holdings. A smaller corporation may have as few as one director who can also serve as the sole officer and shareholder, and larger corporations could have as many as 10 or more.

To make voting easier, it is best to create an odd number for the board of directors to avoid tie voting. Additionally, you will find that businesses and organizations will seek boards of directors who will bring value or meet the needs of their organization. In the case of non-profit organizations, often the board members will be volunteers who do not receive compensation.

Chairperson of the Board

The chairperson's primary job duties are to act as a facilitator and make sure that the board performs its duties. They hold the highest rank on the board and are responsible for:

  • Ensuring proper, timely information for the board.
  • Setting the agenda.
  • Evaluating the performance of the other directors.
  • Making sure the board puts their strategies and plans into practice.
  • Acts as a partner with the CEO to achieve the corporate mission.
  • Appoints committee chair people and attends committee meetings.
  • Discusses corporate issues with the CEO.
  • Helps guide and mediates board actions.
  • Monitors finances and financial reports.
  • Evaluates the performance of the corporation.

The chairperson is the main face of the corporation and will often explain the company to those outside of the organization, as well as attend events on behalf of the corporation. An average salary for the Chairperson of the Board is around $130,000 per year.

Company Secretary

The secretary of the board of directors is the person responsible for regulatory and legal compliance. The duties of the secretary include:

  • Maintaining company registers.
  • Ensuring all legal filings are made promptly.
  • Making necessary disclosure to the shareholders.
  • Keeping board meeting minutes.
  • Setting the agenda.
  • Maintaining regulatory compliance.
  • Managing the organization records.
  • Distributing minutes to members after each meeting.
  • Being familiar with necessary legal documents.

When a business does not have an office, the board secretary will keep the records and all non-financial legal documents such as:

The secretary acts as a trusted advisor in the company and is also there for their insight into the purpose, mission, and framework of the company. On average, a board of directors secretary will make $73,000 per year annually. Most secretaries hold at least a Bachelor's degree in business, and they are sometimes required to maintain legal qualifications.

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