Friday, October 12, 2012

Corporations Law: Board of Directors outline, Authority and Acts

 I. Board of Directors: Authority and Acts

Management of the regular business affairs of the corporation is ordinarily invested in the board of directors, the members of which are elected by the shareholders. The day-to-day management of the corporation is then entrusted to the officers, who are appointed, and can be removed at any time, by the board of directors.

The board can be composed of inside and outside directors. The listing standards for the NYSE and Nasdaq require that the board be composed of a majority of independent directors. The definition of independent director excludes anyone with a material relationship with the company. In other words, they can have no ties to company or management except for their service on the board.

The Chief Executive Officer is usually the chairman of the board. Sometimes the CFO and COO are also on the board, but typically no more than two or three corporate officers serve on the board.

After the Sarbanes-Oxley Act of 2002, a board must have at least 3 committees, each composed exclusively of independent directors:
  1. Audit
  2. Compensation
  3. Nominating and Governance
Fundamental corporate changes (such as alteration of the capital structure, amendment of the articles of incorporation, merger, or dissolution) require approval by the shareholders, usually on the recommendation by the directors. Shareholders have the power to adopt and amend the bylaws but often delegate this power to the directors. In other areas, the shareholders generally have very little direct power over the regular affairs of the corporation.

Del. § 141(a) The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors, except as may be otherwise provided in this chapter or in its certificate of incorporation.

Del. § 141(b)- Every corporation must have a board of directors consisting of at least 1 director.

Del. § 141(b)- The board can act only at a meeting where a quorum of directors is present (majority of the board unless otherwise specified in the articles or bylaws)

Del. § 141(e)- The board can act without a meeting if all members of the board consent thereto in writing.

Del. § 141(h)- Member of the board can participate in a board meeting via conference telephone or other communications equipment.

Del. § 141(d)- A member of the board of directors shall, in the performance of such member's duties, be fully protected in relying in good faith upon the records of the corporation and upon such information, opinions, reports or statements presented to the corporation by any of the corporation’s officers or employees, or committees of the board of directors, or by any other person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the corporation.
Del. § 142(a)- Every corporation needs at least 2 officers to sign shares of stock. Each one verifies the identity of the other. One of the officers shall have the duty to record the proceedings of the meetings of the stockholders and directors in a book to be kept for that purpose. Any number of offices may be held by the same person unless the certificate of incorporation or bylaws otherwise provide.

Del. § 142(b)- Officers shall be chosen in such manner and shall hold their offices for such terms as are prescribed by the bylaws or determined by the board of directors or other governing body. Any officer may resign at any time upon written notice to the corporation.

Interested in learning how to get the top grades in your law school classes? Want to learn how to study smarter than your competition? Interested in transferring to a high ranked school?

No comments:

Post a Comment

11 Benefits of Studying Criminal Justice

Image Source Have you ever considered a career where each day offers a new challenge and the chance to make a real difference? Studying cr...