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BOARD of DIRECTORS - The Corporation's Governing Body

Contact Neufeld Legal PC for your incorporation legal work at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com

The Board of Directors is the governing body of a corporation, elected by the shareholders, with the ultimate legal responsibility for managing the corporation's business and affairs. The Board of Directors functions as the strategic brain trust, providing high-level oversight of the company's activities and performance, and the directors legally required to act in the best interests of the corporation and its shareholders (known as a fiduciary duty).

Board of Directors' Key Roles and Responsibilities

The Board of Directors' duties generally fall into three main areas, focusing on strategy, oversight, and governance:

1. Strategic Oversight and Governance

• Set Direction: Establish the corporation's overall strategic objectives, long-term vision, mission, and values.

• Major Decisions: Approve major business and policy decisions, such as mergers and acquisitions, significant joint ventures, large capital expenditures, and changes to the corporate structure (like amending by-laws).

• Financial Oversight: Approve the annual budget, monitor the company's financial planning, and oversee the integrity of the financial statements and audit process.

• Risk Management: Establish a framework for identifying, evaluating, and mitigating major financial, operational, legal, and reputational risks.

2. Management and Executive Oversight

• Appoint and Supervise Officers: Hire, fire, and evaluate the performance of the Chief Executive Officer (CEO) and other senior executives who run the company's day-to-day operations.

• Determine Compensation: Set the compensation (salaries, bonuses, stock options) for the CEO and other senior management.

• Accountability: Hold the management team accountable for implementing the board's strategy and achieving corporate objectives.

3. Shareholder and Legal Duties

• Fiduciary Duty: Directors are legally obligated to act in good faith, honestly, and in the best interests of the corporation and its shareholders.

• Compliance: Ensure the corporation adheres to all applicable laws, regulations, and ethical standards.

• Dividends and Shares: Make key decisions regarding dividend declarations and share repurchase programs.

A corporation's Board of Directors typically consists of a mix of individuals:

• Inside Directors: Company executives (e.g., the CEO) who also serve on the board.

• Outside (Non-Executive) Directors: Individuals who are not employees of the company, often selected for their external expertise or industry connections.

• Independent Directors: A type of outside director who has no material ties to the company, a requirement for key committees (like the Audit and Compensation committees) in publicly traded companies to ensure objective oversight.

While the board sets the policy and supervises, the corporate officers (like the President and CEO) are responsible for the day-to-day execution and operations.

When corporate matters require professional legal advice and strategic direction, look to the experienced legal representation that corporate clients have relied upon for over two decades. To schedule an initial consultation, contact our law firm at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or via email at Chris@NeufeldLegal.com.