Duties & Responsibilities of Directors & Officers

Directors and officers are responsible for proper function of the corporation.

The Board of Directors is elected by shareholders in an investment corporation. The Board in turn elects officers to handle the daily management operations and employees of the corporation. Directors are responsible for acting in the best interest of the overall corporation and it shareholders. Directors and officers have the duty of being trustworthy and establishing confidence.

Directors and Officers

Since directors have overall responsibility related to the corporation, they must set the example for officers. Directors adopt bylaws of the corporation. They designate the principal business office, determine the fiscal year, designate the corporation's bank or banks, provide initial stock to stockholders, pay the organizational expenses and authorize any initial agreements. Directors adopt a stock option plan and amend articles of incorporation or bylaws when needed. They may also borrow money for the corporation, create employee benefit plans, hold annual and monthly shareholder meetings and determine distributions, dividends or stock splits for the corporation. Officers have the responsibility to abide by the bylaws and follow the direction of the directors. Officers are obligated by duty to complete other delegated assignments from directors.

Loyalty

Both directors and officers must remain loyal to the corporation. This means directors and officers cannot use their personal positions in the corporation to pursue private interests. They also cannot engage in any activities that might hurt the corporation. These individuals cannot abuse their corporate authority or compete with the corporation. This includes conducting any transactions that are not done in fairness to the corporation.

Obedience

Obedience of laws is another duty both directors and officers must adhere to. Obedience means both directors and officers must perform all duties in accord with statues and terms of the corporation charter. Directors and officers must be familiar with laws governing their conduct; they are not excused of misconduct solely because they are unaware of the laws and duties.

References

• All Business: Directors and Officers
• United Western Insurance Brokers: Directors and Officers