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An Introduction to the Law of Corporations: Cases and Materials, Fall 2017

The Nature of the Board of Directors

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Corporations are managed by boards of directors. It's important to note that no director, acting individually, is empowered to speak or act on behalf of the corporation. Individual directors, in that sense, are not agents of the corporation, nor are they principals. The board of directors - as group - is the only party statutorily authorized to manage the corporation.

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Individual directors have no authority to speak on behalf of the corporation unless they have been specifically delegated such authority by the board. Along the same lines, unless otherwise outlined in the certificate of incorporation, no director is superior or has more rights than any other director. Each member of a corporate board has the right to consultation with the others and has the right to be heard upon all questions considered by the board. Absent a governance agreement to the contrary, each director is entitled to receive the same information furnished to his or her fellow board members.

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While stockholders are permitted to act at a stockholders meeting by "proxy" - that is they need not be present, but may authorize someone else to act on their behalf pursuant to instructions - directors are not permitted to delegate their proxy to another at a board meeting. If a director is not present at a meeting, that director's vote may not be counted.  There is important reasons for not permitting directors to act by proxy. A director cannot authorize any one to act for her, because her associates are entitled to their own judgment, experience and business ability, just as her associates cannot deprive her of her rights and powers as director.

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Delaware corporate law embraces a `board-centric' model of governance. This model expects that all directors - and not their proxies - will participate in a collective and deliberative decision-making process.

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Given that the DGCL allocates fundamental decision-making power to the board as a whole, and not to any individual director qua director, all directors must have the opportunity to participate meaningfully in any matter brought before the board and to discharge their oversight responsibilities. In more granular terms, directors must be afforded, at a minimum, (i) proper notice of all board meetings, (ii) the opportunity to attend and to express their views at board meetings, and (iii) access to all information that is necessary or appropriate to discharge their fiduciary duties, including the opportunity to consult with officers, employees, and other agents of the corporation.

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OptimisCorp v Waite (Del. Sup. Ct., April 20, 2016) at Footnote 9.

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