I understand how a board of directors works. I have few questions about it, they're elected by the investors, but do they belong to certain agencies or do they work for the government or do they work for the investors ? What are the conditions to assign them ? What are their obligations ? Can an investor be a member on the board rather than electing someone else to represent him/her ?


Boards of Directors are required for corporations by nearly all jurisdictions. Some jurisdictions have almost self-defeating requirements however, such as in tax havens.

Boards of Directors are compensated by the company for which they sit. Historically, they have set their own compensation almost always with tight qualitative legal bounds, but in the US, that has now changed, so investors now set Director compensation. Directors are typically not given wages or salary for work but compensation for expenses. For larger companies, this is semantics since compensation averages around one quarter of a million of USD.

Regulations almost always proscribe agencies such as other corporations from sitting on boards and individuals convicted of serious crimes as well. Some jurisdictions will even restrict directories to other qualities such as solvency.

While directors are elected by shareholders, their obligations are normally to the company, and each jurisdiction has its own set of rules for this. Almost always, directors are forbidden from selling access to their votes.

Directors are almost always elected by holders of voting stock after a well-publicized announcement and extended time period.

Investors are almost never restricted from sitting on a board so long as they meet the requirements described above.

  • So let's assume the investor elected someone, therefore s/he pays that member an annual salary ? Feb 5 '14 at 20:59

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