Frequently Asked Questions
What is the role of a board of directors in a corporation and what are their fiduciary duties?
The board of directors in a corporation plays a crucial role in guiding the organization towards a sustainable future. They are responsible for making ethical, legal, and sound management decisions and policies, ensuring the business has ample resources to fulfill its mission statement. They also have the responsibility of hiring a competent Executive Director/CEO to handle the day-to-day management duties. In addition to these responsibilities, the board of directors also has fiduciary duties. These duties, which include care, loyalty, and obedience, require board members to act in the best interests of the corporation and its shareholders. The duty of care mandates that board members perform their responsibilities diligently and prudently, similar to how an ordinarily prudent person would behave in a similar situation. The duty of loyalty requires board members to prioritize the interests of the corporation over personal interests or those of another person or organization. The duty of obedience ensures that the corporation operates in a manner that furthers its stated purpose and complies with all statutes and regulations.
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