A corporate officer is a person employed by a corporation who holds an office such as president, vice-president, secretary or treasurer. Officers are appointed to their position by a corporation's board of directors. Officers' responsibilities vary depending on what powers the corporation has specifically given them. Officers are agents of the corporation, and, therefore, they have fiduciary duties to the corporation called the duty of loyalty and the duty of care.
Express authority denotes the responsibilities that a corporate officer has in fact. These responsibilities of corporate officers will depend on each corporation and board of directors. Express authority responsibilities are usually specifically given to the corporate officer in writing, such as a contract. For instance, the treasurer of a corporation may have the expressly granted responsibility of signing all the checks the corporation issues.
Implied authority gives corporate officers responsibilities that are not specifically given to them, but stem from the nature of the office. These responsibilities are implicated by the officer and are considered normal and necessary to the office. For instance, the president of a corporation may enter contracts that she may not have expressly been given authority to enter. Even though the officer has not been granted express authority to enter into those particular contracts, she has the implied authority and responsibility to enter into those contracts by virtue of the office. Further, the vice president has the same implied authority and responsibilities as does the president of a corporation in the president's absence. A treasurer has the authority to do what is necessary to keep track of the corporate funds and the secretary has the authority to do what is necessary to keep the corporate records.
Duty of Loyalty
The duty of loyalty requires that the officer avoid taking any action as a corporate officer that will cause him to benefit above the corporation and the shareholders. This means that the corporate officer has a duty not to use information obtained from the corporation to buy stocks and securities, such as "insider trading." In addition, the officer cannot take business opportunities in which the corporation has an interest, and he cannot join a business that is in competition with the corporation. Finally, the officer cannot enter into a transaction in which he has a personal interest; this is known as a conflict of interest.
Duty of Care
The duty of care requires that corporate officers act in ways that are in the best interests of the corporation. The officer must conduct business in a way that a similarly situated, ordinary prudent person would, and actions must be taken in good faith. This generally means that the officer cannot act negligently in performing her duties. For example, a president should not enter a contract without reading it.