by David Riel

Created on: April 14, 2007   Last Updated: April 18, 2007

If you're a member of a minority, and you've been invited to serve on a corporate board, that's great. Corporations can only benefit if more minorities serve on their boards. But here's an important caveat. Serving as a member of a corporate board of directors is not an honor. It is instead the assumption of serious duties and responsibilities. Be very cautious before you accept the invitation to serve on a corporate board.

Corporations, although they are legal entities, cannot act in person because they have no person. Everything a corporation must do, must be done through its board of directors. Directors find themselves under regulatory, statutory, and common-law duties pertaining to agents, fiduciaries, and trustees. In fact, many years ago, directors were called trustees, because it was understood that they were persons, typically men, who had been placed in a position of trust in respect of a particular company's business affairs.

If these duties seem onerous it's because they are. When you serve on a corporate board, you are assuming significant responsibilities, and exposing yourself to significant risks. For years successful businessmen have been flattered into accepting positions on corporate boards, seeing it as confirmation of their status, of the fact that they had "arrived."

In the wake of recent corporate scandals such as the one surrounding the collapse of Enron, these same businessmen are finally becoming more cautious about stepping into the role of company director. Don't you be the one who winds up taking their place, and taking the fall if the company's fortunes, on whose board you sit, head south.

To protect yourself before you accept a position as a member of a corporate board, no matter how flattering it may be to receive the offer, investigate the company, its officers, and its directors carefully. Are these people whom you trust enough that you would be willing to be responsible for their actions?

If so, fine. You may be pleased with your decision to serve on the board of that company, and gratified by the contribution you are able to make to the corporate world and your community. Remember, though, to obtain insurance that adequately provides you with coverage for your director's duties. Even in the best run companies, things can go wrong.

It's great that minorities are being welcomed on corporate boards. Those companies fortunate enough to have minorities on their corporate boards will be well served by the addition of competent people whose contributions may have been overlooked in the past. But it's important too, that the interests of those minorities are not forgotten, and they not find themselves filling corporate board positions which others have prudently abandoned. With a bit of forethought, you can prevent this from happening to you.

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