One of the duties of a company’s founders is to set up its board of directors. The first hurdle is deciding how many people will be on the board. Here are the pros and cons of different board sizes.
Speed: Since you ARE the board you can get through consents quickly.
Control: You are the sole decision maker.
Not a Strong Start: A board of one doesn’t send a good signal to investors. Successful companies are able to attract talent, including at the board level.
No Independent Director: You will need an independent board director to approve self-interested transactions.
It’s Lonely: A meeting with yourself is no fun!
|Some actions (e.g. implementing a Stock Incentive Plan) require a Stockholder consent signed by the holders of a majority of the company shares. For these, unless you own 50% of the stock, you’ll need to seek other approvals even if you’re the only board director.
Author: Kathy Nolan, Client Services Manager and Corporate Attorney for Shoobx, Inc.
Illustrator: Jason Grover, Designer for Shoobx, Inc.