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Officers’ and Directors’ Roles in Corporate Governance

Officer and directors share in the responsibility of governing a corporation. Shareholders in the corpo-ration elect a board of directors to be in charge of the business. The board of directors is primarily responsible for making decisions, but not for carrying out those decisions. The task of carrying out the decisions made by the board falls on the officers, such as the chief executive officer and the chief financial officer.

State law prescribes the basic powers of officers and directors. Many states have adopted provisions of the American Bar Association’s Model Business Corporation Act (MBCA) or Delaware’s corporation laws. Other states have adopted their own unique laws. In general, if a state law does not provide a requirement pertaining to officers or directors, then the corporation’s articles of incorporation and/or bylaws usually establish these requirements.

Inside Officers’ and Directors’ Roles in Corporate Governance