Corporation Law & Directors' Rights

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Corporation law is established independently in each of the 50 states. Despite some differences in these laws from one jurisdiction to an other, the rights assigned to corporate directors largely are the same no matter where in the country the business is located, according to "The Board Book: An Insider's Guide for Directors and Trustees" by William G. Bowen.


The underlying function of the rights extended to corporate directors is to ensure they can carry out their assigned duties and not face personal liability for their legitimate actions, according to "Corporate Governance: Principles, Policies and Practices" by R. Ian Tricker.


Directors must be able to make educated decisions on behalf of the business and its shareholders. One of the most basic rights of a director is to receive notice of all regular and special meetings of the board, according to Bowen. Directors also have the right to unimpaired access to various corporate records, including agreements entered into by the business, board minutes and governmental filings.


The underlying benefits of the rights afforded directors include protecting the operations and integrity of the corporation itself. In addition, the rights of directors preserve the interests of shareholders, whom directors are elected, in part, to represent as well. Directors have the specific right to make decisions without undue internal or external influence. For example, shareholders can express their desires and opinions, but they cannot improperly pressure directors with threats to force a particular decision.


One of the more persistent misconceptions associated with directors' rights is that they are designed primarily to protect the directors' financial interests. Although protecting a director from personal liability is an element of directors' rights, in most cases a director actually has a duty to avoid direct financial dealings with the business. A director cannot be involved in the decision making process associated with any proposal that might result in a direct or indirect benefit to that director. For example, if a director is the owner or officer of a company that does business with the corporation where he sits on the board, he cannot vote with regard to any issue associated with that relationship.


Protecting an individual director's rights may involve the application of complex legal provisions and even court procedures. For these reasons, directors often are best served by engaging the services of attorneys who specialize in corporate law. The American Bar Association maintains resources to assist directors in finding this type of legal representation.


  • "The Board Book: An Insider's Guide for Directors and Trustees"; William G. Bowen; 2008
  • "Corporate Governance: Principles, Policies and Practices"; R. Ian Tricker; 2009

About the Author

Mike Broemmel began writing in 1982. He is an author/lecturer with two novels on the market internationally, "The Shadow Cast" and "The Miller Moth." Broemmel served on the staff of the White House Office of Media Relations. He holds a Bachelor of Arts in journalism and political science from Benedictine College and a Juris Doctorate from Washburn University. He also attended Brunel University, London.

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