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Small Business - Directors of the Corporation. Every corporation must have at least one director to manage the affairs of the corporation. A director of a corporation must be a person (rather than another corporation), at least 18 years of age, not bankrupt and of sound mind. In many businesses, the directors and shareholders are the same. A director has certain legal duties to the corporation and its shareholders. A director must be reasonably careful and must exercise reasonable skill and must act honestly and in good faith with a view to the best interest of this corporation (call fiduciary duty). This protects the corporation from a director participating in activities which may present a conflict-of-interest from which a director could benefit or profit at the expense of the corporation. In such a situation, a director would have to pay back to the corporation any such benefit or profits. Directors can be liable for the following debts of a corporation:
1) Employees' wages if the corporation can't pay them
2) Income tax, sales tax, employment insurance and Social Security which the corporation does not pay;
A director can also be held responsible for any illegal actions or activities of the corporation and can be convicted of an offense if the director authorized or participated in any criminal or state offense by the corporation.
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