Duhaime's Law Dictionary


Director Definition:

Senior manager(s) selected by shareholders to manage a corporation.

Related Terms: Company, Corporation, Officer, Shareholder

Typically, in the hierarchy of a corporation, directors are second only to shareholders and in many cases, have precedence even over shareholders.

Periodically, usually annually, shareholders will choose individuals with management and other skills related to the business of a corporation,  to manage a corporation on a day-to-day basis.

The senior director of a corporation is usually called chief executive officer or president, although the latter term is also often used to refer to be chairperson of the shareholders.

Pursuant to the terms of a shareholders agreement,  or pursuant to the terms of a shareholder resolution, one or more specified shareholders will often act as the directors of a corporation. This is especially true for small companies.

In turn, directors will hire officers to assist them within their sphere of management responsibility.

Corporations are creatures of statute and created by the state. The common law or as it may be supplanted by statute law, holds directors to a fiduciary duty in terms of their standing with the corporation.

Further, they are to exercise their authority in a reasonably prudent manner.

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