Director Definition and Legal Meaning

On this page, you'll find the legal definition and meaning of Director, written in plain English, along with examples of how it is used.

What is Director?

n. Re-elected at annual shareholder meetings, they are a member of a corporation or association’s governing board. Directors are only responsible for the policy making, not the day-to-day operation which officers and other manager handle. In some instances, directors may also be an officer, but the do not need to be a shareholder. A minimum of three directors on corporate boards is required by most states. The distinction between directors and officers is that officers are hired by the board of directors to manage the business.

History and Meaning of Director

The role of a director dates back to the 17th century when corporations were first established. Directors are elected by shareholders of a corporation or association to oversee the management of the organization. Many corporate laws require a minimum of three directors on a corporate board.

Directors are responsible for the establishment of policies and procedures to achieve the objectives of the corporation. They oversee the performance of executive officers and can also be held liable for breaches of their fiduciary duties to shareholders.

Examples of Director

  1. John was elected as a director of the corporation after the annual shareholder meeting.
  2. The directors of the association met to discuss the budget for the upcoming year.
  3. The board of directors appointed a committee to investigate ethical violations within the company.
  4. The director of finance handles the financial affairs of the organization.

Legal Terms Similar to Director

  • Officer: Hired by the board of directors to manage the day-to-day operations of the business.
  • Fiduciary Duty: The legal obligation of a director to act in the best interests of the corporation and its shareholders.
  • Shareholder: A person or entity that owns shares in a corporation and has certain rights and privileges as a result.
  • Corporate Governance: The system of rules, practices, and processes by which a company is directed and controlled.