What is the Role of a Director in a Corporation?

In this episode of Coffee with Carl, attorney Carl Zoellner explains what the role of the director is in a corporation.

Hello everyone!

Welcome to another episode of Coffee with Carl. I am your host, Carl Zoellner one of the attorneys here with Anderson Business Advisors. 

Today, I want to talk about the role of a director in a corporation. In a previous video, we talked about the role of the shareholder–which is to elect the director. 

Directors are in charge of the global direction of the business. They owe a duty to the shareholder to make sure that they are acting in the best interest of the corporation. They’re also in charge of hiring officers in the corporation that will execute the overall direction of the Board. 

What kind of decisions do directors make? 

Directors make decisions on when to issue more shares, when to hire officers, and whether to encumber the corporation’s assets. If you get a loan based on the corporation’s assets, that would be a director’s decision–in addition to naming someone in charge of the bank account. 

A director-type decision is something that is a major change or outside of the normal course of business for that corporation. A directors’ meeting’s expenses can be deductible. You can have directors’ meetings wherever you’d like, as long as there’s a business purpose and the meeting is actually held. 

Directors can also have regular meetings such as annual meetings, and sometimes, a director can call a meeting even if one wasn’t planned. 

When talking about directors, we think globally. If our corporation is a cruise ship, the director is the captain of that cruise ship. They focus on global issues, and they hire officers to execute the decisions they’ve made and carry out the plan. That is the basics of the director. 

If we’re looking at it from a hierarchy standpoint, the shareholders make up the base. The directors are in the middle. (They are elected by the shareholders.) And the officers are at the top. They are going to be the public-facing portion of your corporation. 

The Takeaway

As always, if anybody has any questions and you are our client, you’re more than welcome to schedule a time with me or any of the other attorneys. 

I would also encourage everybody to continue to take advantage of our free content out there. 

We like to educate our clients so we can have productive conversations when we start looking at your particular situation.

So until next time, I want to thank everybody for joining me for Coffee with Carl. I look forward to seeing y’all. Of course, I plan to attend Toby’s Tax Tuesdays and watch Toni Talks.

I’m also a consumer of our content as well because I like it. Until next time, thanks for joining me. We will catch you on the next episode. Thanks, everyone.

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