Board of Directors clause: Copy, customize, and use instantly
Introduction
A Board of Directors clause outlines the structure, composition, responsibilities, and powers of the board of directors within a company. It defines the selection process, decision-making authority, and governance principles that ensure the board effectively manages the company’s affairs. This clause is crucial for establishing clear roles and ensuring proper oversight and accountability.
Below are templates for Board of Directors clauses tailored to different scenarios. Copy, customize, and insert them into your agreement.
Standard Board of Directors clause
This version includes basic structure and responsibilities for the Board.
The [Company] shall have a Board of Directors consisting of [X] members. The Board shall be responsible for overseeing the management of the company, providing strategic direction, and ensuring compliance with legal and regulatory requirements. Directors will serve for a term of [X] years and may be re-elected by shareholders.
Board of Directors clause with independent directors
This version includes independent directors.
The [Company] shall have at least [X] independent directors on its Board of Directors. Independent directors will not have any material relationship with the company, ensuring that the board remains objective and impartial in its decision-making process. These directors will contribute to the governance of the company, particularly in matters of audit, compensation, and nominations.
Board of Directors clause with election process
This version includes the election process for board members.
Board members shall be elected by the shareholders at the annual general meeting. Nominations for the Board of Directors will be reviewed by the nominating committee, and elected directors will serve a term of [X] years. Any vacancies on the Board may be filled by a vote of the remaining directors, subject to shareholder approval.
Board of Directors clause with special committees
This version includes special committees within the Board.
The [Company] shall establish the following special committees within the Board of Directors: Audit Committee, Compensation Committee, and Nominating and Governance Committee. Each committee will consist of at least [X] directors and will have specific responsibilities as defined in the company’s bylaws.
Board of Directors clause with board meetings
This version includes board meeting requirements.
The Board of Directors shall meet at least [X] times per year. Meetings will be scheduled in advance, with notice provided to all directors. Special meetings may be called at any time by the Chairman of the Board, the CEO, or by any director with sufficient notice to the other members.
Board of Directors clause with chairman and CEO roles
This version includes the roles of Chairman and CEO.
The [Company] shall have a separate Chairman of the Board and Chief Executive Officer (CEO). The Chairman shall preside over meetings of the Board of Directors and ensure the effectiveness of board governance. The CEO shall be responsible for the day-to-day management of the company and will report directly to the Board.
Board of Directors clause with quorum and voting requirements
This version includes quorum and voting requirements for board decisions.
A quorum for Board meetings shall consist of at least [X]% of the directors. Each director shall have one vote, and decisions of the Board shall be made by a majority vote of the directors present at the meeting, unless otherwise specified in the company’s bylaws. In the event of a tie, the Chairman of the Board shall cast the deciding vote.
Board of Directors clause with removal of directors
This version includes provisions for the removal of directors.
A director may be removed from the Board at any time by a vote of [X]% of the shareholders or by a majority vote of the other members of the Board of Directors, if deemed necessary due to actions contrary to the company’s interests, failure to attend meetings, or other justifiable reasons as outlined in the company’s bylaws.
Board of Directors clause with director compensation
This version includes compensation for board members.
The [Company] will compensate members of the Board of Directors for their service, including an annual retainer, per-meeting fees, and reimbursement of expenses incurred while performing board duties. The specific terms of compensation will be determined by the Compensation Committee and approved by the full Board.
Board of Directors clause with conflict of interest policy
This version includes a conflict of interest policy for board members.
All members of the Board of Directors shall disclose any potential conflicts of interest, including financial, personal, or familial relationships that could influence their decisions or actions as a director. The Board shall adopt and enforce a conflict of interest policy to ensure that directors act in the best interests of the company.
Board of Directors clause with director qualifications
This version includes qualifications for board members.
The Board of Directors shall consist of individuals who possess the necessary qualifications, skills, and experience to govern the company effectively. Directors must have experience in areas relevant to the company’s operations and industry, and should adhere to the highest ethical standards in their decision-making.
Board of Directors clause with director succession planning
This version includes a succession planning policy for the board.
The [Company] will establish a director succession plan to ensure that the Board of Directors remains composed of qualified individuals. The Nominating Committee will periodically review the performance of directors and identify potential candidates to ensure that the company has a strong leadership pipeline.
Board of Directors clause with annual board evaluation
This version includes an annual evaluation of the board.
The Board of Directors will conduct an annual self-evaluation to assess its performance and effectiveness. This evaluation will consider the Board’s composition, decision-making process, and its oversight of the company’s management. The results of the evaluation will be shared with the shareholders and used to identify areas for improvement.
Board of Directors clause with director confidentiality agreement
This version includes a confidentiality agreement for board members.
Each director of the [Company] will be required to sign a confidentiality agreement to protect the company’s proprietary information. Directors shall not disclose or use any confidential information obtained during the course of their duties for personal gain or for the benefit of any third party.
Board of Directors clause with oversight of executive compensation
This version includes oversight of executive compensation.
The Board of Directors, through its Compensation Committee, will have primary responsibility for approving executive compensation packages. The Committee will ensure that compensation is aligned with the company’s performance, shareholder interests, and industry standards, and will review compensation levels annually.
Board of Directors clause with board diversity policy
This version includes a board diversity policy.
The [Company] is committed to promoting diversity on the Board of Directors. The Nominating Committee will consider a range of factors, including gender, race, experience, and industry knowledge, when nominating new directors to ensure a balanced and diverse board that reflects the company’s values.
Board of Directors clause with board decision-making authority
This version includes the decision-making authority of the board.
The Board of Directors will have the authority to make all major business decisions on behalf of the company, including approving budgets, capital expenditures, mergers and acquisitions, and corporate strategy. The Board will act as the final decision-making body, subject to shareholder approval when required.
Board of Directors clause with directors’ liability insurance
This version includes liability insurance for directors.
The [Company] will provide directors’ liability insurance to protect members of the Board of Directors from personal liability arising from their actions taken in good faith on behalf of the company. The insurance will cover legal expenses, settlements, and other liabilities incurred by directors in the course of their duties.
Board of Directors clause with right to appoint alternate directors
This version includes the right to appoint alternate directors.
Each shareholder holding [X]% or more of the shares in the company shall have the right to appoint an alternate director to attend board meetings and vote in their absence. The alternate director shall have the same rights and responsibilities as the shareholder they represent.
Board of Directors clause with board responsibilities for financial oversight
This version includes financial oversight responsibilities for the board.
The Board of Directors shall oversee the financial performance of the company, ensuring that financial statements accurately reflect the company’s operations and that internal controls are in place to prevent fraud and mismanagement. The Board will review quarterly financial reports and provide guidance on financial strategy.
Board of Directors clause with special powers for the Chairman
This version includes special powers for the Chairman.
The Chairman of the Board of Directors shall have the authority to call special board meetings, set agendas, and act as the primary liaison between the Board and senior management. The Chairman will ensure that board decisions are communicated to management and followed up appropriately.
Board of Directors clause with independent audit committee
This version includes an independent audit committee.
The [Company] will establish an independent audit committee within the Board of Directors to oversee the company’s financial reporting, internal controls, and auditing practices. The committee will be composed of independent directors with financial expertise and will report directly to the Board.
Board of Directors clause with advisory board
This version includes an advisory board.
The [Company] may appoint an advisory board consisting of industry experts, former executives, and other key advisors who provide non-binding guidance and recommendations to the Board of Directors. The advisory board will not have voting power but will assist with strategic decisions.
Board of Directors clause with specific board roles
This version includes specific roles for board members.
The Board of Directors will consist of the following roles: Chairman, CEO, CFO, and [X] additional directors. Each director will be responsible for overseeing specific aspects of the company, such as finance, operations, legal compliance, and business strategy.
Board of Directors clause with board diversity reporting
This version includes board diversity reporting.
The Board of Directors shall annually report on the diversity of its members, including gender, race, and expertise. The report will be shared with shareholders and stakeholders to ensure transparency and demonstrate the company’s commitment to diversity and inclusion in leadership.
Board of Directors clause with staggered terms for directors
This version includes staggered terms for directors.
The members of the Board of Directors shall serve staggered terms of [X] years. After the initial term, one-third of the Board shall be elected each year to ensure continuity while allowing for regular re-evaluation of board composition.
Board of Directors clause with resignation procedure
This version includes a resignation procedure for board members.
Any director of the Board may resign at any time by providing written notice to the Board of Directors. The resignation will be effective immediately or at a time specified in the notice. A vacancy created by resignation will be filled by the Board according to the procedures outlined in the company’s bylaws.
Board of Directors clause with director attendance requirements
This version includes attendance requirements for board meetings.
Directors are required to attend at least [X]% of the scheduled board meetings annually, either in person or by proxy. Directors who fail to meet this requirement may be subject to removal or replacement by the Board of Directors, depending on the circumstances.
Board of Directors clause with board member conflict resolution
This version includes a conflict resolution procedure for board members.
In the event of a conflict of interest or disagreement among the members of the Board, the matter will be resolved by a vote of the remaining independent directors. If the conflict cannot be resolved internally, the Board may seek mediation or arbitration to address the issue.
Board of Directors clause with right to call special meetings
This version includes the right to call special meetings.
Any director of the Board may call a special meeting by giving written notice to all other directors and shareholders, stating the purpose of the meeting. Special meetings may be held to address urgent matters or issues that require immediate board attention.
Board of Directors clause with director orientation program
This version includes a director orientation program.
New members of the Board of Directors will undergo an orientation program to familiarize themselves with the company’s operations, financial performance, governance practices, and strategic objectives. The program will ensure that all directors are well-equipped to make informed decisions.
Board of Directors clause with board member retirement age
This version includes a retirement age for board members.
The [Company] will implement a mandatory retirement age of [X] years for members of the Board of Directors. Directors who reach the retirement age will step down from the Board unless an extension is approved by the majority of shareholders.
Board of Directors clause with non-compete agreement for directors
This version includes a non-compete agreement for directors.
Directors of the Board will be required to sign a non-compete agreement, preventing them from engaging in any activities or working for any competitor of the [Company] for a period of [X] years after their tenure on the Board ends. This ensures that directors act in the best interests of the company.
Board of Directors clause with emergency powers
This version includes emergency powers for the Board.
In the event of an emergency or crisis situation, the Board of Directors will have the authority to make decisions without convening a formal meeting. These decisions will be documented and ratified in the next regular board meeting. This allows the Board to act quickly in the company’s best interest.
Board of Directors clause with election of new directors by shareholders
This version includes the election of new directors by shareholders.
The shareholders shall have the right to elect new members to the Board of Directors at the annual general meeting or a specially called meeting. Nominations for new directors will be reviewed by the Nominating Committee and voted on by the shareholders.
Board of Directors clause with director performance evaluation
This version includes a performance evaluation for directors.
The performance of each member of the Board of Directors will be evaluated annually. The evaluation will assess each director’s contributions, attendance, and involvement in key decisions. The Board may take corrective actions if a director’s performance does not meet expectations.
Board of Directors clause with shareholding requirement for directors
This version includes a shareholding requirement for directors.
Directors of the Board are required to hold a minimum number of shares in the company, as determined by the Board, to ensure that they have a vested interest in the company’s success. The specific number of shares will be outlined in the company’s shareholder agreement.
Board of Directors clause with succession planning
This version includes succession planning for the Board.
The Board of Directors will develop and maintain a director succession plan to ensure a smooth transition of leadership. The plan will identify potential candidates for key board positions and outline the process for filling vacancies due to retirement, resignation, or other causes.
Board of Directors clause with compensation review process
This version includes a compensation review process for directors.
The compensation of directors will be reviewed annually by the Compensation Committee, which will evaluate the market rate for director compensation and make recommendations for adjustments as needed. Directors’ compensation will be aligned with the company’s financial performance.
Board of Directors clause with right of indemnification for directors
This version includes indemnification for directors.
The company will indemnify its directors to the fullest extent permitted by law for any actions taken in good faith while performing their duties on the Board. The company will provide legal defense and assume responsibility for costs associated with lawsuits or claims against the directors related to their board activities.
Board of Directors clause with provision for director elections by cumulative voting
This version includes cumulative voting for director elections.
Shareholders may elect directors using cumulative voting, where each shareholder may cast a number of votes equal to the number of shares they hold, multiplied by the number of directors to be elected. This method allows minority shareholders to have a greater influence on the election of board members.
Board of Directors clause with rotation of board members for key positions
This version includes rotation of key positions on the Board.
The positions of Chairman, CEO, and other key board members will rotate every [X] years to ensure fresh perspectives and prevent power consolidation within the Board. The rotation will be overseen by the Nominating Committee and require shareholder approval.
Board of Directors clause with proxy voting for shareholder meetings
This version includes proxy voting for shareholder meetings.
Shareholders may vote at meetings by appointing a proxy to cast votes on their behalf. The proxy must be submitted in writing to the company in advance of the meeting and will be valid for the specific shareholder meeting for which it is intended.
Board of Directors clause with emergency board meeting procedure
This version includes an emergency board meeting procedure.
In the event of an urgent situation, an emergency board meeting may be convened with at least [X] hours’ notice. Directors may attend the meeting in person, via telephone, or through video conferencing, and decisions made at the emergency meeting will be recorded and ratified at the next scheduled board meeting.
Board of Directors clause with director non-compete restrictions
This version includes non-compete restrictions for directors.
Directors of the Board shall not, during their term or for [X] years thereafter, engage in or assist any business that competes directly with the [Company]. This non-compete provision is intended to protect the company’s interests and prevent conflicts of interest.
Board of Directors clause with confidentiality agreement for directors
This version includes a confidentiality agreement for board members.
All directors shall sign a confidentiality agreement upon joining the Board of Directors. This agreement will ensure that directors do not disclose any confidential or proprietary information gained through their role on the Board to any unauthorized third parties.
Board of Directors clause with rotation of key board members
This version includes the rotation of key board members.
The Board of Directors will implement a rotation system for key positions, including the Chairman and committee chairs. This rotation will occur every [X] years to ensure diversity of thought and prevent the concentration of power within specific individuals.
Board of Directors clause with shareholder veto power
This version includes a shareholder veto power.
Shareholders holding at least [X]% of the company’s shares shall have the right to veto decisions made by the Board of Directors on significant matters, such as mergers, acquisitions, or amendments to the company’s governing documents.
Board of Directors clause with powers to remove CEO
This version includes the Board’s power to remove the CEO.
The Board of Directors has the authority to remove the Chief Executive Officer (CEO) at any time by a majority vote of the Board. The decision to remove the CEO must be based on the best interests of the company and its shareholders.
Board of Directors clause with director performance reviews
This version includes director performance reviews.
The performance of the Board of Directors shall be reviewed annually. The review process will assess individual director contributions, attendance, and adherence to the company’s values. Directors who fail to meet performance standards may be subject to replacement or additional training.
Board of Directors clause with meeting attendance requirement
This version includes a meeting attendance requirement for directors.
Each director is required to attend at least [X]% of the scheduled Board meetings in a calendar year. Directors who fail to meet this attendance requirement may be subject to removal from the Board or other corrective action.
Board of Directors clause with a maximum board size
This version includes a maximum board size.
The Board of Directors shall consist of no more than [X] members, ensuring an efficient and effective decision-making process. Any increase in the number of board members beyond this limit shall require the approval of the shareholders.
Board of Directors clause with director remuneration
This version includes director remuneration.
The Board of Directors will be compensated for their service based on the company’s performance and industry standards. Compensation will be reviewed annually by the Compensation Committee and may include a combination of cash, stock options, and other benefits.
Board of Directors clause with internal board audit process
This version includes an internal board audit process.
The Board of Directors will conduct an internal audit of its own operations and practices at least annually. The audit will review the effectiveness of board meetings, decision-making processes, and overall governance, with recommendations for improvement where necessary.
Board of Directors clause with special shareholder rights
This version includes special rights for certain shareholders.
Shareholders holding at least [X]% of the company’s shares shall have the right to nominate one or more directors to the Board. The nominations must be submitted to the Nominating Committee for review and approval.
Board of Directors clause with removal of board members
This version includes removal of board members.
A director may be removed from the Board of Directors by a majority vote of the other directors or by a shareholder vote. Grounds for removal include failure to fulfill duties, unethical behavior, or conflicts of interest.
Board of Directors clause with oversight of executive compensation
This version includes oversight of executive compensation.
The Board of Directors, through the Compensation Committee, will oversee the company’s executive compensation program. The committee will ensure that compensation is aligned with the company’s performance, shareholder interests, and industry standards.
Board of Directors clause with diversity of expertise requirement
This version includes a diversity of expertise requirement for the board.
The Board of Directors will include members with diverse areas of expertise, including finance, law, operations, marketing, and technology. This diversity of expertise will ensure that the board can effectively oversee all aspects of the company’s business operations.
Board of Directors clause with special voting rights for directors
This version includes special voting rights for certain directors.
The Board of Directors may designate certain directors as having special voting rights for specific matters, such as approving significant investments or changes to the company’s capital structure. These rights will be outlined in the company’s bylaws and applied as appropriate.
Board of Directors clause with advisory role for retired directors
This version includes an advisory role for retired directors.
Retired directors of the [Company] may be invited to serve in an advisory capacity to the Board of Directors. While they will not have voting rights, they will offer guidance on strategic issues and contribute their experience to important discussions.
Board of Directors clause with shared decision-making authority
This version includes shared decision-making authority.
Decisions of the Board of Directors will be made collaboratively, with all members having an equal say. In the case of disagreements, the Chairman may facilitate discussions to reach a consensus, but decisions shall require a majority vote.
Board of Directors clause with independent director evaluation
This version includes independent director evaluation.
The performance of independent directors will be evaluated separately from other board members to ensure that they are providing unbiased oversight and guidance. This evaluation will be conducted by the Nominating and Governance Committee and results will be shared with shareholders.
Board of Directors clause with delegation of authority
This version includes delegation of authority by the Board.
The Board of Directors may delegate certain decision-making authority to specific board committees or senior management to streamline operations. Delegated authority will be subject to approval by the Board and will be outlined in the company’s governance policies.
Board of Directors clause with regular board training
This version includes regular board training.
All members of the Board of Directors shall undergo regular training to keep them informed about industry trends, legal and regulatory changes, and best practices in corporate governance. This training will be provided annually or as needed.
Board of Directors clause with shareholder communication policy
This version includes a shareholder communication policy.
The Board of Directors will establish a communication policy that ensures transparency with shareholders. The policy will include regular updates on company performance, strategic decisions, and shareholder meetings, and will provide shareholders with the opportunity to ask questions and raise concerns.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.