If you’re just getting started as a Florida corporation, you probably have questions regarding the different individuals and positions involved with business operations. One factor you’ll need to consider is the role of the board of directors since Florida’s Business Corporations Act provides that all organizational powers must be exercised under the authority of its members. In general, the board is an elected group of individuals that act on behalf of stakeholders.
However, there’s much more to the function of the board of directors, so it’s essential that you understand the powers and duties of the individuals that you designate to occupy this important role. Your Clearwater, FL business formation lawyer can assist with the legal details and process of electing them, but an overview may be helpful.
Naming Members of the Board:
When you organize your corporation under Florida law, you’ll designate various factors regarding your board of directors through your bylaws. For instance:
- You can set the number of members of the board;
- You’ll determine the details regarding elections, such as through an initial shareholder meeting, annual meeting, or other milestones; and,
- You can order the frequency of board meetings.
Role of the Board of Directors:
Beyond the requirements for naming members of the board, your bylaws should also provide details on what they do to enhance your business. These individuals are tasked with making fiduciary decisions for stakeholders, so they stand in the shoes as owners of the company. In most cases, the board will make decisions regarding:
- Employment issues for executives;
- Growth and expansion;
- Insurance and risk management;
- Investments; and,
- Many other issues.
The board may also take on many other tasks that are appropriate for the corporation, and – in many cases – primary stakeholders will be acting as members of the board. Unless your company is publicly traded, you can enjoy some flexibility on the authority and responsibilities of board members.
Removal of Board Members for Wrongdoing:
One issue you cannot change with respect to board members is their fiduciary duty to the company. Anyone in this position is required to put the corporation first, aside from their own personal interests. If a board member breaches his or her fiduciary duty, that person could be subject to removal. In addition, a member of the board of directors can be held liable for losses the corporation suffers for breach of fiduciary duty. It’s also possible that a board member could face criminal charges, which could include jail time, fines, and restitution as punishment for a conviction.
Talk to a Clearwater, FL Business Formation Attorney for Details
While this summary of the role of the board of directors may be helpful, you may need assistance with designating who will serve, describing the powers of members, and related details. At Clearwater Business Law, our knowledgeable lawyers are prepared to serve these and other needs for business owners in Pinellas County and the surrounding region. Please contact our office today at (727) 785-5100 to schedule a consultation with a member of our team.