The vast majority of states and the MBCA require corporations to have one or more directors, as specified in the corporation’s articles of incorporation or bylaws. This number may be increased or decreased as needed by amending the articles or bylaws. In many states, the board of directors itself may increase or decrease its size. Most modern statutes allow corporations to compensate directors for their services. A board may take an official action if it has a quorum present at its meeting, meaning that at least half of the board members are in attendance.
A director of a corporation is well-advised to stay abreast of the activities of the board. A director has the legal right to have access to information that allows the director to perform his or her job. To perform properly, a director should be diligent in studying the information that is available. This may include the following:
- Review board meeting agendas.
- Review minutes of corporation board meetings.
- Inspect books and records of the corporation, as well as any other data that the director may reasonably request.
- Inspect corporate facilities as appropriate
Directors may take steps to negate the possibility of becoming personally liable if the board of directors approves a questionable transaction. Under the MBCA, a board member who is present at a meeting assents to a board action unless the board member takes one of three steps. These include the following:
- Objecting at the beginning of a meeting to holding the meeting or transacting business at the meeting;
- Dissenting or abstaining from the action and having the dissent or abstention recorded in the minutes of the meeting; or
- Delivering written notice of the dissent or abstention to the presiding officer of the meeting before or immediately after the adjournment of the meeting.
A director who is not present at a meeting is not deemed to have assented to any action of the board in the director’s absence. However, a director who votes in favor of a corporation’s actions cannot later submit a dissent or abstention.