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Board of directors | ||
In relation to a company, a director is an officer of the company charged with the conduct and management of its affairs. The directors collectively are referred to as a board of directors. Sometimes the board will appoint one of its number to be the chairman of the board. Theoretically, the control of a company is divided between two bodies: the board of directors, and the shareholders in general meeting. In practice, the amount of power exercised by the board varies with the type of company. In small private companies, the directors and the shareholders will normally be the same people, and thus there is no real division of power. In large public companies, the board tends to exercise more of a supervisory role, and individual responsibility and management tends to be delegated downward to individual professional executive directors who deal with particular areas of the companies affairs (such as a finance director, a marketing director, etc.). Another feature of boards of directors in large public companies is that the board tends to have more de facto power. Between the practice of institutional shareholders (such as pension funds and banks) to grant proxies to the board to vote their shares at general meetings, and the large numbers of shareholders involved, the board can comprise a voting block that is difficult to overcome. However, there have been moves recently to try and increase shareholder activism amongst both institutional investors and individuals with small shareholdings. ClassificationDirectors are traditionally divided into executive directors and non-executive directors. Broadly, executive directors tend to be persons who are dedicated full-time to their role in relation to the management of the company. Non-executive directors tend to be "outsiders" brought in for their expertise, and to lend a more impartial view in relation to strategic decisions. Many corporate reforms in the late 1990s and early 2000s were focused on increasing the number and role of non-executive directorships in public companies in the belief that an impartial view was more likely to restrain corporate excess and egos and reduce the likelihood of another major corporate scandal. This view is not new; similar recommendations were made by the Cadbury Committee in the In practice, executive directors tend to dominate board meetings simply by virtue of their much greater familiarity with the company and its internal workings. Some countries also classify persons who are not actually directors as either de facto directors, or "shadow" directors. A de facto director is a person who is not actually appointed as a director, but acts as if he were (often because he wrongly believes that he has been properly appointed as a director). A "shadow" director is also not a director at all, but seeks to control the direction and management of the company without putting himself forward as being able to do so. Exercise of powersThe exercise by the board of directors of its powers usually occurs in meetings. Most legal systems provide that sufficient notice has to be given to all directors of these meetings, and that a quorum must be present before any business may be conducted. Usually a meeting which is held without notice having been given is still valid so long as all of the directors attend, but it has been held that a failure to give notice may negate resolutions passed at a meeting, as the persuasive oratory of a minority of directors might have persuaded the majority to change their minds and vote otherwise. In most common law countries, the powers of the board are vested in the board as a whole, and not in the individual directors. However, in instances an individual director may still bind the company by his acts by virtue of his ostensible authority (see also: the rule in Turquand's Case). Copyright 2008 - France BtoB from Wikipédia
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