I am not an attorney, however, have worked with attorneys and Boards of Directors (B.O.D.) to understand the differences between ‘board member roles’ and ‘management roles’. When Board Members of a for-profit organization also engage in management and oversight duties of the organization, clear duties must be established for both roles.
The first duty of a Board Member in a for-profit organization is to protect the legal and financial status of the organization. For the for-profit business, it means protecting the ‘corporate shield’. The corporate shield is a legal designation and critical in the cases of legal actions against the business.
On the other hand, as managers in the business, Board Members must follow the policies, procedures and practices established by the Board. Yes, those same policies, practices and procedures they approved during formal Board of Director Meetings. This constitutes by nature a change in functions of these individuals.
Sometimes in small organizations with multiple Board Members/Executive Managers, those roles become confused when holding meetings. A management team meeting of the members of the Board does not constitute a formal and documented Board of Directors Meeting. Likewise, a formal Board of Directors Meeting is not a ‘management meeting’.
The Board Meeting, must meet the standards and guidelines as set out by the laws of the State of Washington, which may include a ‘manager’s report’. If the members of the Board need to discuss both ‘board business’ and ‘management issues’, I recommend they conduct the meetings consecutively, not concurrently. By conducting a formal board meeting, with a formal board meeting agenda, reporting what is necessary for the board to know and/or act on, voting and then adjourning the board meeting, the Board has recognized and acted upon its ‘corporate duty’. A management meeting can ensue, which then allows those same individuals to address the day-to-day functions for the business.
If you have any questions about these distinct roles, contact your attorney to assure you are doing what you must do to protect your corporate shield.