Individual directors are not agents of the

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Individual directors are not agents of the corporation. Only the board itself can act as a  “super-agent” and bind the corporation. A director can also be a shareholder, especially in closely-held corporations’ Rights of Directors. Participate in corporate decisions and inspect corporate books and records. Compensation (usually a nominal sum). Corporation should guarantee reimbursement  (indemnification) or purchase liability insurance to protect the board from personal  liability Corporate Officers and Executives. Officers serve at the pleasure of the Board of Directors but have fiduciary duties to  company as well. Their employment relationships are generally governed by contract law and employment  law.
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Officers may be terminated for cause What is the Business Judgment Rule?  When is it used? Business Judgment Rule. Immunizes a director or officer from liability from bad decisions. Court will not require directors or officers to manage “in hindsight.”  As long as decision was reasonable, informed, made in good faith and in the best  interests of the corporation, BJR will apply. How are the numbers of Directors determined? Election of Directors.  Generally, the number of directors is set forth in the articles of  incorporation: Directors appointed at the first organizational meeting. In closely held companies,  directors are generally the incorporators and/or the shareholders. Term of office is generally for one year. Removal of Directors:  directors can be removed for cause. Vacancies on Board:  if director dies or resigns or new position created by the articles or  bylaws.     What voting power do the directors have? Inside director  (officer), vs.  outside director.   Often the same person is both an  officer and director, and receives compensation as an officer How are the meetings of the Board of Directors conducted? Quorum must be present to conduct official business Duty of Loyalty Duty of Loyalty :  subordination of personal interests to the welfare of the corporation. No competition with Corporation. No “corporate opportunity.” No conflict of interests. No insider trading
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No transaction that is detrimental to minority shareholders.. Duty of Care Duty to Make Informed Decisions.   Directors are expected to be fully informed on  corporate matters.  Duty to Exercise Reasonable Supervision.  Directors are expected to supervise  officers when delegated work.
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