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).