Director Actions

Duties of Directors To Supervise Corporation

The Directors are responsible for the oversight and direction of the Corporation's activities and have duties to maintain their obligations to the corporation. The officers of the Corporation on the other hand, the President, Treasurer and Secretary, are generally responsible for the day-to-day business operations of the Corporation and the details of implementing the general policies and directions of the Board of Directors.

When Should Director Approval Be Sought?

This raises the question of when the officers should seek approval and input from the Directors in their daily activities. Clearly, seeking director approval of every minute detail of the business is not practical and would impeded the ability of the corporation to do business. However, a good corporate officer will continually advise the Board of Directors and seek approval over major corporate issues.

The following are just some of the items over which Board approval and consideration should be obtained: (1) election and removal of officers, setting terms of their employment, duties, salaries, benefits, review of their actions and approval of employment agreements; (2) issues related to setting up corporate bank accounts including selecting the financial institution where accounts are maintained, who shall be authorized signatories and any limitations or special restrictions on such signatories; (3) setting budgets and approving corporate expenditures outside of budgets; (4) financing transactions such as loans, mortgages, security interests, etc.; (5) purchases of significant corporate assets or leasing significant property and equipment (6) entering major contracts of any nature; (7) setting benefits for employees including pension and profit sharing, stock option plans, and other benefits; (8) adopting employment policies and procedures; (9) declaring dividends and other distributions to shareholders based upon corporate earnings; (10) adopting and amending the corporate Bylaws; (11) any transaction regarding the sale or issuance of shares of the corporation's stock.

The above list is certainly note meet to be all inclusive of the items over which Director consideration and approval should be sought. When there is any doubt, it is normally prudent to submit the matter to the Directors for consideration.

Following Formal Procedures

It is important that each step in the formal process of obtaining Board of Director consideration and approval be followed.

Our Small Business E-Book contains a number of resources to assist you in following the formalities of approval by the Board of Directors and contains some common wording for various Director resolutions along with form resolutions, notice, waivers of notice, and other items necessary to assist you in following corporate formalities.