On the board’s agenda

An alternate universe: The small, young company board

Directors are treated the same, but their companies differ 

Corporate law treats all directors alike; the same standards apply to all directors, regardless of the size, maturity, or other characteristics of the companies on whose boards they serve. All directors have the same fiduciary duties of due care and loyalty, are protected by the business judgment rule, and are expected to engage in rigorous oversight. 

However, all companies are not created equal. Size and maturity are among several significant differentiating factors among companies. 

There are many ways in which small, young companies differ from large, mature ones. Small companies have far fewer resources and may therefore find it harder to be resilient when faced with regulatory, economic, and other challenges. In addition, small companies—particularly those in early stages of growth—may need ongoing infusions of capital to stay alive, much less to grow and thrive. And they may also have less mature and robust systems and processes, including those relating to internal controls. 

If these and other characteristics of smaller, less mature companies differ from those of their larger, more mature counterparts, does this mean that their boards have different roles and responsibilities? 

Press the download button to download full “On the board’s agenda”.