Legal Question in Business Law in Indiana

Responsibilities and liabilities of a director

I was recently named director of my department at a small company (about 65 ppl). I have heard that there are some legalities tied to a job title like this in some cases. I will be making some decisions that could financially impact the company. Am I liable? I think this title also comes with some priviliges, but what are they? A different small company gave me this title a few years ago, and a legal consult yanked it away with no real explanation to me. I just don't want to be embarrased twice.

Any advice would be appreciated.


Asked on 4/20/01, 7:25 pm

1 Answer from Attorneys
Lawrence A. Stein Aronberg Goldgehn Davis & Garmisa, LLC

Re: Responsibilities and liabilities of a director

Congradulations. If you were made a member of the board of directors, as it seems from your posting, rather than simply given the title "director," then you are undertaking a serious duty to the shareholders of the company. These duties are too complex to discuss here, but generally require you to participate in the business for the benefit of the shareholders, not yourself. For example, your votes as a member of the board must be completely devoid of self-interest, and you cannot compete with the corporation. You may want to determine if the corporations has insurance to cover you, called "director's" insurance, and you should consult with a competent attorney, not the corporation's attorney to discuss the details of the corporation and your duties.

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Answered on 6/14/01, 11:22 am


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