Corporate Directors
Generally, a corporation is considered a legal "person", capable of making contracts, paying taxes, able to sue/be sued and otherwise enjoying the legal rights and responsibilities of a natural person, of course it needs real people to carry out its business.
The directors have well delimited rights and responsibilities, relative to their office in the corporation. In most states, one-person corporations allow a single natural person to hold all corporate offices (for example a Delaware Corporation).
As defined under each state's Business Corporation Act (BCA), directors are given the authority and responsibility for managing the corporation. Most states require the directors must be at least 18 years old, while they also can reside in any state and need not be shareholders. They meet and make decisions collectively grouping in the so-called board of directors. Unlike some other countries on the globe, only real, natural persons can be elected as directors in the board. For example a holding company cannot designate itself in the board; instead it will name a real person director.
In most states, directors must meet at least once each year. The first reason behind this is that most state BCAs specify that directors must be elected for a one-year term at an annual meeting of shareholders. After the new board is voted (or re-elected), they hold a board meeting accepting their new terms and continuing with the specific discussions of the corporation they represent.
The schedule of meetings is usually regulated by the corporate bylaws, eventually with written notices to the directors.
The decisions of the board are proposed by one or more directors and in the end they vote for or against it. The states BCAs define a set of rules regarding the way the board votes. The rules usually regulate the required quorum for the meetings (the number of directors who must be present to hold a board meeting) and a majority-voting rule.
Very important to note is that most of these rules can be overridden by the corporate bylaws, unless stated otherwise in the BCA. However, most states require a minimum quorum of directors greater than one-third the number of the full board.
Directors are required under state Business Corporation Act statutes to act in the best interests of the corporation. If a court decides that a director has their duties, the director may be held personally liable for any resulting financial loss to the corporation (or even its shareholders); not to be confused with the limited liability of the shareholders. We enumerate as director's duties the following: duty of care (director must act in good faith) and the duty of loyalty. The last one means a director must give the corporation a right of first refusal as to business opportunities the director becomes aware of while serving the corporation.
