Tuesday, November 23, 2010

Directors' responsibilities

An opportunity arises and you have the opportunity to become a Director.  To sit on a Board of Directors is exciting, whether it's your own company or if it's an entity like a charity or a not-for-profit that you're especially passionate about.

But before you take that plunge, know that Directors have special legal responsibilities to the company, over even that of Officers (CEOs or CFOs).  Directors owe a fiduciary duty to the corporation.  What this means is that as a Director, you must act honestly and in good faith in the best interests of the corporation, rather than in your own personal interest.

While at first glance this may sound self explanatory and you may wonder why fiduciary duty is such a big issue, the reality is that in ordinary everyday business dealings, Directors often forget about this fiduciary and unknowingly breach it. 

So before taking that big seat at the Directors' table, be sure to consult a lawyer and know the new responsibilities that you're taking on.

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