Written by Ryan McClure, Attorney McLane Middleton
Q: What is the primary role of a board of directors?
A: The board is the corporation’s highest authority and final arbiter, responsible for managing and directing the corporation’s affairs, including making key strategic decisions and overseeing management’s execution of board directives. Directors must act in good faith, put the corporation’s best interests first, and exercise the care that a reasonably prudent person would exercise in similar circumstances.
Q: How does a board balance its authority with delegation to management?
A: Boards typically delegate day-to-day operations and strategy implementation to officers and executives, who are involved in the business’s operations. Boards retain authority over fundamental matters—approving bylaws, issuing stock and dividends, approving mergers, and appointing officers. An effective board actively monitors performance rather than manages operations.
Q: What legal duties do directors owe?
A: Directors owe fiduciary duties of care, loyalty, and obedience. They must act in good faith, with reasonable care, stay informed, participate actively, and avoid conflicts of interest. Failure to meet these duties can lead to personal liability; under certain circumstances shareholders may bring direct suits against board members for breaches of duty.
Q: How can boards effectively oversee management without micromanaging?
A: Focus oversight on strategy, risk, financial performance, and compliance while respecting management’s operational role. Set clear priorities, review delegation policies regularly, demand timely and relevant information, and probe reports appropriately—without undermining management accountability through excessive intervention.
Q: Can a director also be an officer?
A: Yes. When serving in multiple roles, an individual must be clear about which capacity they are acting in. Wearing multiple hats invites heightened scrutiny, increases the risk of conflicts of interest and self‑dealing claims, and creates greater exposure to suits by minority shareholders. Disclose conflicts, abstain from votes involving a conflict, document decisions, and always maintain a clear separation between governance and operational roles.
Q: Are there particular statutes or regulations boards should know?
A: Yes. New Hampshire RSA 293‑A governs corporate fiduciary standards and governance; state‑chartered banks are subject to RSA 383‑A:5 and related provisions; and nonprofit boards should follow the New Hampshire Attorney General’s guidance for charitable organizations regarding duties of care and regulatory compliance.
Q: What practical advice would you give board members?
A: Know your bylaws and applicable state law, come to meetings prepared, engage constructively, and identify whether items are for decision, oversight, or advice. Conduct regular board self‑evaluations and update delegation policies to match the corporation’s evolving needs.
By distinguishing decision‑making, oversight, and advisory roles—and operating within New Hampshire’s legal framework—directors can meet their fiduciary duties and meaningfully support their organizations.
For assistance navigating corporate matters, contact a trusted attorney at McLane Middleton.
Know the Law is a biweekly column sponsored by McLane Middleton. Questions and ideas for future columns should be emailed to knowthelaw@mclane.com. Know the Law provides general legal information, not legal advice. We recommend that you consult a lawyer for guidance specific to your particular situation.