Does Your Minnesota Small Business Need a Board?

Minnesota requires corporations to have at least one “director”, and requires limited liability companies to have at least one “governor” on their respective Boards.

But beyond meeting the technical requirements, should your Minnesota small business have an active, engaged Board?

There are several advantages to having an active Board – particularly one including directors/governors who are not family members or otherwise dependent upon the business for all or much of their income.

Ideally, Board members will know when to be a team player and when to demonstrate their independence – all for the best interests of the business.

Independent Board members can say things that a strong Chief Executive Officer (CEO) may not want to hear, but should hear for the benefit of the business.

Board members also bring perspective, experience, relationships and skills that may differ from that held by company owners and managers.

Of necessity, corporate and company officers are focused on the day-to-day management of the business. Board members, on the other hand, focus on long-term strategies and oversee management of the business.  The Board can act as a sounding board and source of inspiration for the owners, and improve manager accountability.

Board members typically focus on such questions as:

• What should be the long-term strategy?
• Is the business well managed?
• Is there a corporate culture of integrity?
• Does the business comply with relevant laws and regulations, and with the entity’s own governing principles?
• Who will succeed current leadership and ownership of the business?
• (For corporations): Is the dividend policy fair to the existing owners? And, does the dividend policy leave sufficient funds to grow the business?

Board members who are carefully chosen for their diversity in backgrounds and experience may help alert the corporation/company to potential risks and help find solutions to issues or potential issues.

Thus, in many instances, a Board is worth the time and effort that it takes to pull one together.

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Disclaimer: This Blog is for informational purposes only and is not to be construed as legal advice. If you have questions, please seek the advice of an attorney. An attorney-client relationship is not formed by reading this Blog. If you are interested in Wittenburg Law’s representation of you, you must contact Wittenburg Law for a determination of whether your matter is one for which Wittenburg Law is willing and able to accept representation of you.

Bonnie Wittenburg, Wittenburg Law Office, PLLC, 601 Carlson Parkway, Suite 1050, Minnetonka, MN 55305         952-649-9771     bonnie@bwittenburglaw.com   www.bwittenburglaw.com