Learn something new every day
More Info... by email
An alternate director is a person selected to temporarily replace a permanent member of a corporation's board of directors. The corporate law in most countries does not ordinarily allow directors to transfer their fiduciary responsibility to oversee the affairs of the corporation onto third parties. This default rule of law can be superseded by specific provisions in the corporation's articles of incorporation or bylaws that allow an outside person to act in a director's stead in certain special circumstances.
The board of directors of a corporation sets the overall direction for the company, hires executive staff to run day-to-day operations, provides oversight to ensure the corporation operates to maximize shareholder value, and complies with government regulations. Its legal obligation to act in the best interest of the company is fiduciary and arises from a jurisdiction's corporation statute. This means that a director who does not attend meetings or cannot devote an adequate amount of attention to the affairs of the company can be held personally liable for misfeasance if things go wrong on his watch.
Directors are elected pursuant to the provisions of the corporation's bylaws. There are a finite number of directorships, and the position holds significant responsibility over the affairs of the company. It is in the company's best interest to control the term of service and method of replacing board members when terms expires. Appointment to a board is never an open-ended process, and the position cannot be passed on to another without going through an election process. There are times when a director becomes functionally unavailable to perform his regular duties and, in that instance, the board can decide to allow him to appoint an alternate director.
A director can become functionally unavailable for medical reasons, for instance, or due to a family emergency. He may need to be away from his duties for a finite amount of time but does not want to resign his position. As long as the corporation's articles or bylaws either make provision for it or do not speak against it, the board can vote to allow the director's selection of an alternate director to serve as his proxy.
The approval of the remaining board members to the selection of the alternate director is key. Any selection made by the unavailable director can ultimately be voted down if the person is considered unsuitable. An appropriate selection of a qualified individual can allow board business to proceed without disruption, particularly if the absence of a member of the board would affect quorum requirements on votes to take major actions.
One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days. Thank you for helping to improve wiseGEEK!