As an emerging business owner, have you considered the possibility of engaging other business experts as board members who can help in the governance of your business?
For a business that is planning to go public, a board of directors is essential, but it can also be a useful tool for private companies that want to improve their attractiveness to investors. By law, an S-Corp also must have a board of directors, and many venture capital firms will require you to create a board of directors as a condition of their investment.
A board of directors can help round out the skill set you need to effectively run a business. If you and your co-founders don’t have a strong financial background, for example, a board member with accounting expertise can be a valuable asset. Technology, marketing and legal professionals may also be appropriate additions to the board.
As you prepare to recruit board members, you should begin drafting the necessary documents that will outline board members’ roles and responsibilities. Your business attorney can help you draft the articles of incorporation, bylaws and board policies that will dictate how the board operates. In addition, you should have the members sign a non-disclosure agreement that will help protect your intellectual property and other proprietary information.
If a formal board of directors is not the right fit for your company, an advisory board might be a better option. These boards can help you make important business decisions, but don’t operate under strict bylaws or rules. If you do opt for an advisory board, however, it is still a good idea to have these board members sign a non-disclosure agreement. Consult with your business attorney and local small business development center for more details on creating an advisory board.
Contact EmergeCounsel today for business legal counsel. We can help you draft your board of directors documents and other important business operating agreements.