Powers and Duties of Company Directors
What to understand better what a person on a board of directors of a C Corporation in the state of Colorado can do legally, i.e..
1) Can a board member request any information the company has available or are there limits?
2) What things should a board member avoid doing?
3) What are the main things a board member should ask of the corporate officers?
1 Answer from Attorneys
Re: Powers and Duties of Company Directors
I am a California lawyer and do not practice in Colorado, so I will confine my remarks to things that are generally true nationwide. I will quote from "Corporate Director's Guidebook" published by the Section of Business Law of the American Bar Association and available directly from the ABA or from on-line booksellers such as BN and Amazon.
As to question #1. "The law recognizes certain prerogatives as necessary to the performance of a director's duties. Among the most important are the rights to: *Communicate with key executives, subject to reasonable time constraints; *inspect books and records and, subject to a director's duty not to disclose the corporation's confidential information, to be provied with copies of such data as the director may reasonably request; *inspect plants and facilities as reasonably required for the performance of duties; *be given notice of all meetings in which the director is entitled to participate; *receive copies of all board and committee meeting minutes or reports whether or not the director is a member of that committee; and *communicate directly with the corporation's principal external and internal advisers and, when appropriate, obtain the advice, at the corporation's expense, of outside legal counsel, investment bankers, accountants, and other consultants.
Question #2. The ABA guide counsels directors to avoid conflicts of interest, taking opportunities from the company for private gain, and most forms of self-dealing unless fully disclosed and approved in advance by the disinterested directors. A director must also avoid neglecting his duties of oversight and review. A director must avoid insider trading and similar violations of the securities laws.
3. A board member does not manage management; rather he 'oversees' the officers. A director should expect corporate officers to be capable, dedicated, diligent, loyal and ethical. Read the ABA booklet for more detail.
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