DIRECTORS, the persons authorized to manage and direct .the affairs and business of a corporation or company. The directors are sometimes called managers or trustees in ac cordance with the purpose and nature for which the corporation or company was formed. At the present time, nearly if not all corporations are formed under general laws and it depends on the law under which the corporation is created as to the number of directors and their qualifi cations. The general qualification is that all directors must be stockholders in the corpora tion or, if it has no stock, they must be mem bers of the corporation. The directors are gen erally elected by the stockholders, and some States have passed laws allowing cumulative voting, by which each stockholder may multiply the number of his shares by the number of di rectors to be elected, and cast all his votes for one director or distribute them in any manner he desires. It has been held that this kind of a law is unconstitutional, if applied to corpora tions created before the law was passed; as it impairs the obligation of the contract. It may be valid, if applied only to corporations created after the passage of the act. In some cases directors are appointed. The directors must act as a body and not as individuals. A ma jority of the board of directors is necessary to a legal meeting and if that number is present a majority of those present will be sufficient to perform any act. When there is a quorum present, all acts performed are presumed to be done in the regular course of business. The directors for the purpose of the business of the corporation are held to be the corporation itself ; and their powers and duties depend on the laws under which the corporation is formed and the charter and by-laws of the corporation. Notice to the board of directors during a meeting of any matter in which they are required to act is notice to the corporation.
The directors are considered as general agents of the corporation, and they are the only ones that can manage the business of the cor poration; although the directors are generally elected by the stockholders they are responsible to the corporation and through the corporation to the stockholders. As the directors derive
their power from the charter their acts are of no effect if they are outside of the delegated power; and all acts performed by the directors which are outside of their power must be passed upon by the stockholders.
While directors are sometimes called trus tees, they are not held to the same strict ac countability as an ordinary and regular trustee; although their position is a fiduciary one. At common law directors are under no personal liability for the debts or obligations of the cor poration. They are, however, liable to the stockholders in an action of tort for gross negligence or misfeasance in office resulting in loss to them. The directors may deal with the corporation the same as any other individual; but they cannot use their position for any special benefit to themselves. They may even go so far as to buy up the indebtedness of the corporation and at a sale buy in and acquire the absolute title to the corporate property. The directors may delegate their power to an agent, as a private individual may do, and the agent's power is not impliedly revoked by a change of the members of the board, as the act of appointment is not that of the directors in dividually but of the board. The directors have a discretionary power and when it is honestly exercised there is no one that can make them account for their acts. A frequent illustration of this power is in relation to suit by or against the corporation, as to whether they shall be brought or defended. If a director's individual interests are in conflict with the interests of the corporation the act must be fair and just to the corporation. Modern statutes have increased the liability of directors of corporations to an extent varying considerably in the different States of the Union. A provision sometimes made is one making directors personally liable for the debts of the corporation if they do not file annually with the Secretary of State a re port upon the affairs and business of the cor poration. Usually the motive of the director in taking the office is the prosperity of the concern as benefiting him in the position of a stock holder. See CORPORATIONS.