Ask HN: Does a new board member need to sign a contract?
6 comments
Hey, I'm one of the co-founders of Clerky :) Under Delaware law, directors are subject to fiduciary duties. E.g. duty of loyalty and duty of care. You can read more here: https://corpgov.law.harvard.edu/2020/03/10/directors-fiducia... In part because of this, it's not standard for directors to enter into agreements for their service on the board.
But if your situation requires something beyond those fiduciary duties — e.g. if you want them to be obligated to spend a certain amount of time on the company, want to memorialize compensation terms, etc., then an agreement could make sense. If you need a referral to an attorney to help with that, feel free to reach out to our support team!
But if your situation requires something beyond those fiduciary duties — e.g. if you want them to be obligated to spend a certain amount of time on the company, want to memorialize compensation terms, etc., then an agreement could make sense. If you need a referral to an attorney to help with that, feel free to reach out to our support team!
Thanks so much, that's exactly what I was looking for! I'm not looking for anything beyond fiduciary duties and they've agreed to zero compensation. Thanks! A help topic on this linked during the "add a director" flow would help put a mind at ease. I really appreciate your service so far.
Great to hear! We'll definitely take a look at how we can improve this!
IANAL...but you might want to talk to a lawyer who is familiar with such things in your local jurisdiction about this.
Gut feel: If they're getting on your Board without needing to sign anything...that sounds like a "favor to a friend" relationship. Vs. any sort of serious, professional commitment.
Gut feel: If they're getting on your Board without needing to sign anything...that sounds like a "favor to a friend" relationship. Vs. any sort of serious, professional commitment.
Yeah, I've been trying to minimize lawyer costs :) Clerky has helped tremendously with that, but maybe I finally need one. Though I imagine this sort of thing is generally pretty boiler-plate.
Even in absence of a legally binding contract signing an agreement to terms would be useful for all board members.
If the problem is that no such terms exist, well that's step 1.
If the problem is that no such terms exist, well that's step 1.
I use Clerky and there's a process to add a member to the board, but it's just a board resolution with the existing members (just myself currently). The new board member doesn't have to sign anything as part of that process which I found surprising. I emailed Clerky and they didn't offer any specific guidance.
Is it common for a new board member to sign some contract when agreeing to become a board member?
I have high trust for these new members, so that's not an issue, but it just seems a bit odd to me for it to be so informal that they don't have to sign anything.
If an agreement is common, are there any templates out there? If not, any services you might suggest for a bare bones agreement? And do they sign the agreement before the board resolution accepting them, or after?
Edited to add: Delaware C Corporation (Public Benefit Corp)