What is a Director?

A Director is a decision maker in a company. Together, all directors form The Board of Directors, which is the governing body for a company. Every year at their annual meeting, the stockholders of the company elect Directors to the Board. Delaware law requires that you have at least one director. If you have more than one director, we recommend appointing an odd number of Directors so you don’t end up with a board deadlocked 50-50 board for a major decision.

Each Director has one vote, and all major decisions need to be ratified by the Board. You will need the Board's approval to sell your company. You will need the Board's approval to raise a round of financing. The Board appoints officers of the company like a CEO and approves all matters of major strategic importance.

What is the typical setup?

Delaware law requires that each corporation have a CEO or President and a Secretary.  However, one person can fill more than one role. A Founder can serve on the board of directors and be an officer of the Company (very common). In single founder companies, the founder has three hats: Director and two Officer positions - CEO and Secretary.

In early stage startups, the Founders usually both sit on the Board and act as the officers that run the day-to-day business of the company. However, as the company grows and brings on  investors, outside directors will likely be appointed to the board.

Here’s a typical setup for a two founder startups:

  • Founder 1, Director and CEO
  • Founder 2, Director and Secretary