CPA BEC 1 - Corporate Governance
CPA BEC 1 - Corporate Governance
Board of Directors
o No Individual Authority
o Act as group if quorum (majority of group) Duly Constituted
o Primary role of directors is to safeguard companys assets and to maximize
shareholder return.
o Declaration of Distributions to Shareholders Including Dividends & Shares.
o Fiduciary Duties Directors are fiduciaries of the corporation and must always act in
the best interests of the corporation. Must act in good faith. Duty of Loyalty.
o Right to Rely A director can rely on information from officers, employees,
accountants, legal council, or a committee of the board whom the director believes to
be reliable and competent.
o Liability for Unlawful Distributions Liable for authorizing a distribution that would be
in violation of the law.
o Corporate Opportunity Doctrine
o Indemnification Company can pay for legal fees.
o Limitation on Director Liability If Directors act in bad faith
Officers
o Officers are individual agents of the corporation who manage day to day operation
and may bind the corporation to contract made on its behalf.
o Selection and Removal By directors and may be removed by the directors with or
without cause.
o Authority
o Actual Oral/Written Instruction
o Apparent Title CEO/CFO
o Fiduciary Duties and Indemnification
o Also May Serve as Directors But according to good Corporate Governance the
majority of the board should be independent.
Sarbanes-Oxley Act of 2002
Corporate Responsibility Enhanced Financial Disclosures Fraud
o Title III Corporate Responsibility
o Audit Committee & CEO/CFO Representations
o Public Audit Committees Public companies are responsible for
reestablishing an audit committee that is directly responsible for the
appointment, compensation and oversight of the work of the public
accounting firm employed by the public company (referred to as an issuer)
The auditor reports directly to the audit committee