The board of directors for a corporation is responsible for steering the corporation through the rough waters of its mission to the shareholders. A corporate board also has legal duties and other duties.

How the Board of Directors Works with the Shareholders

The board acts on behalf of the shareholders to make overall policy decisions and provide oversight. The board has a fiduciary duty with respect to the shareholders; that is, the board has financial and other responsibilities to keep the corporation running efficiently so the shareholders don't lose money.

Primary Duties of a Corporate Board of Directors

Here are the primary duties of a corporate board:

• Fiduciary responsibility
  As noted above, corporate board members have a fiduciary responsibility to care for the finances and legal requirements of the corporation. They must act in good faith and with a reasonable degree of care, and they must not have any conflicts of interest. That is, the interests of the company must take precedence over personal interests of individual board members.
   
• Mission and Vision
  Board members are responsible for setting the mission of the company and assuring that all actions are related to and adhere to that mission. The board can change the mission, but only after careful deliberation. All large corporations have mission statements, and creating a mission statement should be one of the first things the board of a small business should tackle. 
   
• Oversight
  Corporate boards of directors do not participate in day-to-day decision-making; instead, they set overall policy, based on the corporate mission and vision, and they exercise an oversight function, reviewing the actions of corporate officers and executives.
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  • Annual Meeting
    At the annual meeting of the corporation, the board announces the annual dividend, oversees election of corporate board members, elects or appoints officers and key executives, and amends the bylaws, if necessary.

  Liability of Corporate Boards of Directors

  What liability do corporation board of directors members have in their board positions? Not as much as you might expect. Corporate board members have a good deal of latitude within the scope of their duties as corporate board members. Board members must be free to act in the interest of the shareholders in order to run the corporation in the best way they see fit and to take appropriate risks to help the company grow.

  Many corporations include officer and director liability insurance in their insurance packages, but remember that this insurance doesn't cover certain lawsuits against board members.

   Gregory Boop, Business Insurance Expert, says this about the liability of corporate board members: 

  Directors and officers may be sued individually for acts or errors they commit while serving the corporation. These individuals may be held personally liable for such acts. If a director of officer is found liable for a wrongful act, his or her personal assets may be used to pay damages to the plaintiff.