for the rest of us non-lawyers
Disclaimer: The contents of these pages are offered as general principles, but not as legal opinions. Statutory law and entity policy on board structure, lines of authority and board discipline vary widely. Some of the comments here may not be applicable, or may be wrong in some situations, depending on the regulatory and organizational environment. When in doubt consult competent legal counsel. See the further disclaimer at the end.
Definitions and basic concepts for board governance are on the starting page.
Some scenarios illustrating fiduciary misconduct are collected on a separate page.
A governing board is a collective entity itself. It speaks with a single voice. To ensure this, the governance model should include the designation of an individual as the sole public spokesperson for the entity (usually the COO or CIO), and ensure that all other staff and fiduciaries refer any queries to that designated individual.
In positive terms, this means that individual fiduciaries:
- speak outside board meetings only as directed by the board.
- speak outside board meetings only in a manner and with substance that accords with entity or board policy
- they raise entity issues at board meetings only.
- if in opposition to a measure, they may register that fact in the board minutes, but elsewhere must support it.
- they are required to disclose any instances of their own misconduct.
- information designated as confidential by the board (which personal information always is) cannot be disclosed by a board member to another person.
In negative terms, this means
- fiduciaries have no opinions of their own about the entity outside board meetings.
- they may publicly or privately engage in any explicit or implied criticism of or dissent with the entity's policies, procedures, or personnel outside a board meeting.
- they may never engage in a dispute of any kind with a stakeholder or staff member.
- they may never write a letter on entity stationary or identify themselves in a communication as a fiduciary of the entity or state or imply that they are acting on behalf of the entity unless specifically directed to do so by the board. Any such unauthorized representation, whether for monetary or personal purposes, constitutes fraud.
If a board member has reason to believe that the entity has engaged in illegal activities, and upon raising it at a board meeting is out voted by the other directors, then the dissenting director must first resign from the board, then lay the matter before the proper authorities for investigation and disposition. Though still bound by all other aspects of fiduciary duty and solidarity even after resigning, duty to the law trumps duty to the entity in such instances.
Go back to the starting page.