What is a “director”?

In our post about corporations, we mentioned that they are general run by a board of directors.  The board may be composed of any number of directors, depending on the size of the corporation.  The directors set the direction that the corporation will go in its operations.  They hire corporate officers, whom they direct and authorize to take certain actions.  Directors can be shareholders, but do not have to be.  They may also serve as officers.

In Illinois, directors owe fiduciary duties to the corporation.  That means that, absent an agreement with the corporation, the directors are not able to compete against it or take business opportunities for themselves or other companies they are associated with without first offering the opportunity to the other board members to see if the corporation wants to first take advantage of it.  Because of these fiduciary duties, it is often a good idea for corporations to carry Directors & Officers (or D&O) insurance policies, insuring against wrongdoing by the corporate officers and directors.

Give us a call today to discuss who the directors of your corporation are and whether you need to take further steps to protect yourself (if you’re a director) or your business (if you’re an owner).

 

If you liked this post, follow us on Twitter sign up for our monthly newsletter using the form in the sidebar. And be sure to read the Disclaimer.

Charles Wentworth
Latest posts by Charles Wentworth (see all)
Charles Wentworth
Charles Wentworth
Charles is an attorney in Glen Ellyn, Illinois. After graduating from the University of Utah, he clerked for Chief Justice John T. Broderick of the New Hampshire Supreme Court. He then became a litigation associate at Kirkland & Ellis LLP before opening his own office and partnering with Rick Lofgren. He lives just outside of Chicago, where he participates in community activities, including Boy Scouts and little-league baseball.