Many corporations, even the smallest, are guilty of using friends, relations and acquaintances to fill open spots on their director boards. But ability is strongly needed.
The board of directors has the actual legal responsibility for the proper function of any corporate business. And each director has joint and several liability for any sins of omission or commission in his actions.
That means he can be sued individually for neglect of responsibility of the entire board, in the event of any board errors or conceived fraud by board members. Simply, the board member with the deepest pockets or most to lose may get the brunt of a lawsuit.
Most important, business experience ought to be the number one requirement for board membership. However, that too often gets short shrift. (See the Earl J Weinreb NewsHole® comments.)
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