What Is the Role of the Board of Directors in a Corporation?
All corporations, whether nonprofit or for-profit, must have a board of directors that acts as the governing body. Furthermore, the board of directors must determine the corporation's purpose for existence. According to the All Business website, many states allow corporations to operate with a single board member.
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Ethics
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Board members must adhere to the highest ethical standards, as they are a reflection of the company they represent. Board members must act in a prudent manner, and all decisions should align with the best interests of the corporation. Board members of corporations must put their personal agenda to the side when handling corporate affairs.
Appointing Corporate Officers
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In most instances, the board of directors doesn't handle the daily operations of the corporation. Instead, the board of directors is responsible for electing corporate officers who will manage the daily operations of the corporation.The board of directors also must select an individual to serve as chief executive officer of the company (CEO). As mentioned on the Free Management Library website, a corporate board of directors must evaluate the performance of a CEO and offer guidance in the areas of strategy implementation and leadership. The board of directors has the power to retain or dismiss the CEO.
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Govern
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The board of directors create and approve the bylaws of a corporation. The bylaws govern the corporation by setting the rules and regulations that shareholders, board members and other key individuals must follow. Typically, the board of directors approves the corporate bylaws at the first corporate board meeting.
Corporate Resources
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A board of directors must acquire resources for the corporation. In the case of a nonprofit corporation, that might mean it solicits donations for the corporation. With a for-profit corporation, a board of directors can acquire resources by issuing company stock. Once the corporation has these resources, the board of directors must determine how to manage them in accordance with the best interests of the corporation. To this end, the board of directors may create budgets to provide transparency and insure that corporate funds are properly allocated.
Considerations
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Many states require board members to conduct at least one meeting per year. A number of corporations opt to hold quarterly board meetings. Furthermore, states require corporations to keep accurate minutes of board meetings. Corporate minutes show the process used by the board of directors to make important corporate decisions. Board members must keep accurate records to prove that the corporation adheres to the highest ethical standards.
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