How are the directors selected?
The articles of incorporation must provide how the directors will be elected or appointed. It is not acceptable to provide that the directors will be elected or appointed “as set forth in the bylaws.” Under Virginia law, a nonstock corporation is managed by a board of directors, which, in turn, appoints the officers of the corporation. In most instances, after incorporation, the directors are selected by the members, or by the directors in office. When the directors elect or appoint their successors, this is referred to as a self-perpetuating board of directors. It is not acceptable to provide that future directors will be appointed by a named individual. This arrangement is unacceptable because when the individual dies, no mechanism will be in place for the selection of subsequent directors. Another acceptable director selection mechanism in the articles of incorporation is to provide for an “ex-officio” director. This is an individual who holds a particular office in another organiza
Related Questions
- If a company is subject to a binding obligation requiring directors to be selected in a manner contrary to Listing Rule 5605(e), does it need a nominating committee?
- How will the Board of Directors be selected and what percentage will each organization have on the Board?
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