Board of Directors Guide 2010

03/30/2010

The current difficult business environment poses many challenges to boards of directors. Directors are facing intense public and political scrutiny as a result of the many questions raised by the worst economic crisis since the Great Depression of the 1930’s. The recent well-publicized failures, excesses, and fraud in American business have lead to numerous proposals for corporate governance reforms. Reform proposals include new and proposed federal legislation and regulations, Securities and Exchange Commission rule-making, and amendments to New York Stock Exchange and other stock exchange rules, as well as decisions from various courts, shareholder proposals, and policy recommendations from non-governmental organizations. These proposals include, among other things, reforms intended to improve the transparency of corporate transactions and financial statements, accountability of management to shareholders, and protection of the rights and interests of shareholders.

Because directors and their decisions and decision-making processes are currently subject to intense public and political scrutiny, there has been an increased focus by directors on the proper role and functioning of boards. Many commentators believe that prudent and thoughtful action by board members, rather than governmental or stock exchange oversight and regulation, is of paramount importance in improving board performance. The manner in which directors work with each other and with management to govern the company, shape its strategic vision, and oversee the implementation of that vision presents many complex issues that are often not susceptible of being effectively regulated by government. It is impossible to have a “one-size-fits-all” approach to effective functioning of boards of directors. Accordingly, each board of directors should develop structures, policies, and practices which are specifically tailored to the needs of each company.

Because of the changing landscape of corporate governance, it is more important than ever for each board member to have a firm understanding of the fundamentals relating to the board’s core functions, its role and duties, its procedures and operations, and the key issues facing the board. This outline is intended to assist board members in understanding the proper role and functioning of the board in the new political and regulatory environment in which we live.

To read the full outline, click on the PDF linked below. Other topics include:

  • The Core Functions of the Board
  • Directors’ Fiduciary Duties and Liabilities
  • Directors’ Fiduciary Duties in M&A Transactions
  • Fiduciary Duties in the Zone of Insolvency
  • Key Issues for the Board in 2010
  • Board Selection, Composition and Structure
  • Board Committees
  • Board Functioning and Procedures
  • Directors of Nonprofit Corporations 

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