Every corporation must have at least one director. Directors are elected by the shareholders of the corporation, and they are the individuals ultimately responsible for overseeing the business and affairs of the corporation. Directors are also responsible for appointing officers (such as the CEO).

When you incorporate your business with SkyLaunch, our curated incorporation package will include all the necessary documentation and approvals to get you set up initially as the sole shareholder, director and officer of your corporation.

SkyLaw has an excellent blog here that goes into a lot of detail about what it means to be a director of a large corporation, including public corporations (with shares that are publicly traded on a stock exchange). Being a director of your own corporation will be less involved but some of the basic principles still apply:

1. Fiduciary Duty

Directors owe a fiduciary duty to the corporation. This means that directors must, in exercising their powers and discharging their duties, act honestly and in good faith with a view to the best interests of the corporation. This duty is owed to the corporation itself and not to the shareholders, regardless of whether the director is also a member of management (an officer) or is a shareholder.

In practical terms, it means that a director must not personally take advantage of business opportunities that otherwise belongs to the corporation. Directors must disclose any conflicts of interest and act accordingly (e.g., refrain from voting) and must keep information about the corporation confidential.

2. Standard of Care

Directors must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. This means that each director must devote reasonable time and attention to the affairs of the company; and take appropriate steps to make informed decisions.

3. Personal Liability

While shareholders generally have limited liability, directors can have personal liability in certain instances such as unpaid wages to employees, unpaid taxes and environmental damage.

Directors might also face personal liability for approving the issuance of securities for consideration that is less than fair value (see SkyLaw’s blog about issuing shares for services), paying dividends when the corporation is insolvent, or voting to approve of a transaction if they have a conflict of interest and did not disclose this conflict.

4. Other Duties

At the end of each financial year, directors must meet and pass certain “annual resolutions” to, among other things, appoint officers for the upcoming year and approve the corporation’s financial statements. If you opt to become a SkyLaunch Member, we can help you with these annual resolutions and corporate filings.

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