Corporate Governance Matters, 3rd Edition

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Board of Directors: Duties and Liability

In this chapter, we examine the duties and liabilities that come with directorship. We start with an overview of the role of the board and the requirement for independence. We then review the basic operations of the board. This includes evaluating the process by which topics are selected, deliberated, and decided. Next, we review the process by which directors are elected and removed. Finally, we examine the legal responsibilities that come with directorship and consider the potential liability directors face when they fail to uphold their duties. Although we focus on boards of U.S. corporations, the broad principles apply to boards in all countries.

Board Responsibilities

In a document called “Principles ...