Choosing Directors and Officers
The board of directors is your company’s brain. It can generally be as few as one director or as many as you like. In many small companies, the directors are also the shareholders. Larger companies (particularly public ones) may bring on a full board of director including professional outside directors.
A director has a responsibility to make sure the company collects and pays its taxes, files its annual reports, and oversees borrowing decisions of the company. As the company grows, directors may also be liable for environmental pollution, workplace harassment, or unpaid wages if the company does not have policies in place. Generally, due diligence, prudence, and liability insurance can minimize the risks.
Directors hold meetings and can pass resolutions by meeting or by written motions to approve loans and major contracts. Directors can oversee the company themselves or appoint officers (ie. secretary or controller), who can take on roles.
Directors owe a fiduciary duty to their company, so they have to be careful not to steal corporate opportunities for themselves or act against the best interests of a company. This is generally more of a concern when there are multiple shareholders depending on the director to act in the best interests of a company.