TeachMeFinance.com - explain director
director -- a person responsible for determining the policy of a corporation, institution or other entity. Directors are usually elected by the shareholders, but sometime are appointed. Directors appoint the organization's president, vice presidents and other operating officers, and decide among other things, when dividends are paid.
Director -- A member of a body (board of directors) chosen (elected) by the stockholders of a corporation to direct and manage the affairs of the corporation. The board of directors selects and elects from its members the president, vice-president and other general officers of the company. The directors of a corporation are usually elected annually. There is, at any rate, an annual election for directors, but when a board of directors is divided into classes the terms of the directors are for more than one vear. Thus, if a board of directors is divided into three classes the directors are elected to serve three years, but each year the term of one class expires. The term of class B (or class 2) expires the year after the term of class A (or class i) and the term of class C (or class 3) expires the year after the term of class B. Under such an arrangement, of course, when the board of directors is originally created the directors of class A (or class i) are elected to serve one year, the directors of class B (or class 2) to serve two years and the directors of class C (or class 3) to serve three years. Thereafter directors are elected to serve the full term of three years, except as vacancies are to be filled, when directors are elected to serve for unexpired terms, whatever the duration of them may be. A board of directors can act legally only as a board ; the action or promise of a director by himself is not binding on the board or on the company. If a director enters into a contract with his corporation he does not thereby forfeit his position as director. Neither is the contract void, but it is voidable at the suit of any dissatisfied stockholder. When it is provided by the law under which a corporation Is organized or by its by-laws how- and when a resignation is to become effective that rule governs. If there is no such provision the resignation becomes effective as soon as it is communicated in writing to the board of directors and its formal acceptance or entry upon the minute books of the corporation is not necessary.
About the author
Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.