Episode 2: Public v. Private & Fiduciary v. Advisory: Different Boards for Different Situations

Panel: Will ClarkeBob Lerner, and Kathleen Murray

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All corporations in the United States must have a board of directors, a fact that holds true for even the smallest of companies. The vast majority of these corporations are very small and most of those are owned by a single, or a small # of shareholders, who are actively involved in day-to-day management. And for these firms, the board of directors is usually nothing more than a legal formality- – a “paper” board. But when a company grows large enough or has realistic ambitions to do so, it must look to form a board. And the same is true whether the company happens to be a limited liability company with one or more managing members.

In either case, the first step may take the form of an advisory board. However, at least in the case of most such companies, there is an ultimate need for a real board – a fiduciary board of directors. It sounds simple but creating and properly utilizing a board has many complexities based on ownership (e.g., public vs. private companies) and other factors. However, the ultimate objective of any board must be to meet the needs of the company over which it is a steward. Structure makes all of the difference in achieving this objective.

This episode of Bare Bone Board Basics compares and contrasts (1) advisory boards, (2) fiduciary boards of private corporations, (3) fiduciary boards of public corporations, and (4) managing members of limited liability companies.

As with each episode in this series, the information presented in this webinar will be equally helpful and accessible to company owners/leadership as to board members and prospective board members.

Case Law Referenced:

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