When Does a Corporation Need to Require a Board of Directors?

by Christopher Carter; Updated September 26, 2017

Depending on the state of incorporation, a corporation may have to name the company's board of directors in the articles of incorporation. This means the board of directors must be established prior to the company's first meeting. In other instances, a corporation does not have to name the board of directors in the articles, which means board members do not have to get named until the company's initial meeting.

Size

A corporation's board of directors must contain at least one director. Corporations in states like Ohio and Arizona must select at least three board members, unless the company has fewer than three shareholders. When a corporation has fewer than three shareholders, the number of directors may equal the number of shareholders. A corporation's bylaws indicates the number of board members that can serve on the company's board of directors. Some states like Florida require board members to have reached at least 18 years of age, while other state do not impose an age requirement on directors of a corporation.

Considerations

The company's board members get chosen by the shareholders of the corporation. A board member may serve as an officer of the company. For example, a corporation owned by a single shareholder has one person acting as the company's director, treasurer, president and secretary. A corporation's board of directors has the responsibility of selecting the officers that manage the company's day-to-day activities. Board members serve a term indicated by a corporation's bylaws. Shareholders of a corporation have the right to remove a board member at their discretion, with or without cause.

Board Styles

A number of styles exist that a corporation's board of directors can implement to run the company. Some boards may use an informal style of management whereas other boards may adopt a more formal management style. A board of director may get classified as a "working board" where the company's directors do everything from implementing strategic policy to fixing the copier. Other boards may focus more on company policy, which means making decisions regarding how to use company resources. A corporation's board of directors has a requirement to act in the best interest of the company's shareholders.

Duties

Board members of a corporation have a duty to govern the company as a whole. That means enforcing the rules and regulations outlined in the company's bylaws. A priority of a corporation's board concerns making decisions that maximize shareholder profits. The board members can establish committees, such as a budget and finance committee, to ensure that company goals get met. Every committee should consist of at least one board member. In addition, board members must ensure that a corporation maintains compliance with all legal requirements on the local, state and federal level.

About the Author

Christopher Carter loves writing business, health and sports articles. He enjoys finding ways to communicate important information in a meaningful way to others. Carter earned his Bachelor of Science in accounting from Eastern Illinois University.