Source - https://techcrunch.com/2016/11/05/what-you-need-to-know-about-startup-boards/
TL;DR - Boards of directors are typically organized in a standardized fasion and directors have duties they must satisfy.
Helpfulness - 3
Tags - board of directors, founders, common stockholders, fiduciary, financing round
- What is the typical structure of a board of directors?
- What role do directors play in the management of a company?
- Every company is required to have a board of directors by law (one is allowed).
- Most companies prefer to have an odd number of directors.
- It is common to allocate a board seat to the firm/person who led the initial seed round.
- A typical setup to allow founders to retain control of the board is to give common stockholders (founders) two board seats and new investors one seat.
- New board seats are commonly allocated to the lead investors of each new round of investment.
- An independent seat, someone with industry knowledge and helpful contacts, is usually designated following the second round of financing.
- Board members are fiduciaries.
- The fiduciary obligation of board members is to maximize value for all stockholders.
- Board members must satisfy the duty of care and the duty of loyalty.
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