Corporate Officers: Roles, Duties, and Legal Accountability

Introduction

Corporate officers are the people chosen by a company’s board of directors to run daily operations and carry out the board’s decisions. Typical titles include President or CEO, Vice President, Secretary, and Treasurer or CFO. Many companies also appoint assistant officers and officers for subsidiaries.

Officers are different from directors. The board sets strategy and oversight; officers manage the business day to day. In the US, officer powers and duties come from state corporate law (for example, Delaware General Corporation Law or the Model Business Corporation Act), the company’s bylaws, and board resolutions. Titles and responsibilities can vary, and one person can hold more than one office in smaller companies.

This guide explains what officers do, how they’re appointed, the duties they owe, and how courts treat officer conduct—using plain language and practical steps.

What You'll Learn

• What a corporate officer is and how officers are appointed and removed
• The main officer roles: President/CEO, Vice President, Secretary, and Treasurer/CFO
• Fiduciary duties (care, loyalty, and good faith) and the business judgment rule
• Authority to act on behalf of the company and when personal liability can arise
• Recordkeeping and compliance expectations, including minutes and reporting
• Case-style examples showing how courts view officer mistakes and misconduct
• Practical steps for structuring roles, controls, and indemnification in US companies

Core Concepts

How Officers Are Appointed and Removed

• Source of authority:
  • Bylaws define officer positions and basic duties.
  • The board of directors elects officers by resolution and can remove them at any time.
• Terms and overlap:
  • Officers usually serve at the pleasure of the board without a fixed term.
  • In small businesses, one person can serve in multiple roles (for example, President and Treasurer).
• Employment status:
  • Officers may also be employees with offer letters or contracts that cover pay, benefits, and severance.
  • Removal from office does not always end employment, and vice versa; check the documents.
• Subsidiaries:
  • Each entity should have its own appointed officers and records, even within a corporate group.

Common Officer Roles

• President or CEO
  • Manages overall operations and implements board policies and strategies.
  • Often the public face of the company and primary decision maker between board meetings.
• Vice President (or multiple VPs)
  • Assists the President and may lead functions such as sales, operations, or HR.
  • Steps in when the President is unavailable, if the bylaws or board authorize it.
• Secretary
  • Keeps the corporate minute book, prepares and maintains minutes, and manages notices, consents, and formal records.
  • Maintains stock records and helps with state filings and corporate seals, if used.
• Treasurer or CFO
  • Oversees budgeting, accounting, financial reporting, banking, and cash management.
  • Designs and monitors internal financial controls.

Titles can differ (for example, COO instead of President), but duties should be clearly assigned in the bylaws, job descriptions, or board resolutions.

Fiduciary Duties and the Business Judgment Rule

• Duty of care:
  • Act with the care a reasonably prudent person would use in similar circumstances.
  • Prepare, ask questions, and rely on qualified advisors and reports when reasonable.
• Duty of loyalty and good faith:
  • Put the company’s interests ahead of personal gain.
  • Disclose conflicts, avoid self-dealing, and do not misuse company assets or information.
  • Do not take corporate opportunities for personal benefit without board approval.
• Duty of obedience to law and corporate documents:
  • Follow applicable laws, the certificate of incorporation, and bylaws.
• Business judgment rule:
  • Courts generally will not second-guess informed, good-faith decisions that have a rational basis—even if the outcome is poor.
  • This protection can fall away if there is fraud, bad faith, self-dealing, or gross negligence.

Authority: Actual, Apparent, and Board Approval

• Actual authority:
  • Express: Granted in bylaws, job descriptions, or board resolutions (for example, “Treasurer may sign checks up to $50,000”).
  • Implied: Needed to carry out express duties (for example, approving routine vendor purchases).
• Apparent authority:
  • Arises when the company’s conduct leads third parties to reasonably believe an officer can act (for example, an officer routinely signs contracts).
• Limits and ratification:
  • Large transactions, debt, mergers, or equity issuances usually require board approval.
  • The board can ratify an officer’s unauthorized act, but until then the officer may face personal risk.
• Formation issues:
  • Signing contracts before the company exists or without proper authority can expose the signer to personal liability.

Recordkeeping and Compliance

• Minutes and resolutions:
  • The Secretary maintains accurate minutes showing attendance, matters considered, and decisions taken.
  • Written consents can approve actions without a meeting, if allowed by state law and bylaws.
• Corporate records:
  • Keep bylaws, charters, stock ledgers, board and shareholder minutes, officer lists, and key contracts current and organized.
• Reporting:
  • File annual or biennial state reports and keep a registered agent on record.
  • Public companies have additional reporting and internal control duties; CEOs and CFOs typically certify financials under federal law.
• Document retention:
  • Maintain a written schedule for how long to keep financial and corporate records.

Indemnification, Advancement, and D&O Insurance

• Indemnification:
  • Many states allow companies to indemnify officers for expenses from lawsuits arising from their corporate role, except for bad faith or improper personal benefit.
  • Delaware Section 145 is a common model; specifics vary by state and company documents.
• Advancement:
  • Companies often advance legal fees during a case, subject to repayment if the officer is later found not entitled to indemnification.
• D&O insurance:
  • Directors and officers liability insurance can cover defense costs and some settlements, subject to policy terms and exclusions.

Key Examples or Case Studies

Smith v. Jones Corporation (illustrative)

• Facts: The corporate Secretary kept incomplete minutes and failed to record key approvals. Later, a contract dispute turned on whether the board had authorized a deal.
• Outcome: The court questioned the company’s records and allowed the dispute to proceed, increasing cost and risk.
• Lesson: Accurate minutes and resolutions are not paperwork—they are legal proof of authority.

Doe v. ABC Industries (illustrative)

• Facts: The President inflated sales figures and hid liabilities to close a financing round.
• Outcome: The court found fraud and breach of fiduciary duty. The President faced personal liability and penalties.
• Lesson: Officers must act in good faith and tell the truth, especially about financial performance.

Jones v. XYZ Corporation (illustrative)

• Facts: A Vice President ignored internal reports flagging major operational problems, causing preventable losses.
• Outcome: The court held the Vice President responsible for breaching the duty of care through negligence.
• Lesson: Officers must review credible warnings and take reasonable steps to fix issues.

Williams v. TechCorp (illustrative)

• Facts: The Treasurer diverted funds to a personal account and falsified statements.
• Outcome: Criminal charges and civil liability followed, along with clawbacks and insurance disputes.
• Lesson: Internal controls and segregation of duties help prevent and detect misuse of funds.

Practical Applications

Set up officer roles the right way

• Update bylaws to list officer titles, how they are elected or removed, and core duties.
• Use a board resolution to appoint officers and define any limits (for example, contract or spending thresholds).
• Keep an up-to-date authority matrix showing who can sign what.

Strengthen financial controls

• Separate duties for cash handling, approvals, and recordkeeping.
• Require dual signatures above set amounts and periodic reconciliations.
• Schedule internal or external audits, especially for fast-growing companies.

Improve meetings and minutes

• Prepare agendas and materials for the board in advance.
• Record who attended, topics discussed, decisions, and any recusals.
• Store minutes and consents in a secure, searchable minute book.

Manage conflicts and approvals

• Use written disclosures for potential conflicts of interest.
• Route related-party transactions or unusual deals to independent directors or a special committee.
• Document the review process and reasons for decisions.

Keep up with filings and certifications

• Track state annual report deadlines and maintain a current registered agent.
• For public companies, support CEO and CFO certifications with strong internal controls and audit committee oversight.

Address training and ethics

• Train officers on fiduciary duties, insider trading rules, confidentiality, and accurate reporting.
• Refresh training annually and whenever roles change.

Plan for coverage and succession

• Review indemnification provisions in bylaws and adopt individual indemnification agreements.
• Maintain D&O insurance with limits and exclusions suited to your risk profile.
• Create an emergency succession plan for key roles.

Special situations

• Startups and small businesses: One person may hold multiple offices. Keep formalities, separate bank accounts, and written approvals to preserve limited liability.
• Subsidiaries: Appoint local officers, align policies with the parent, and maintain separate books and records.

When a problem surfaces

• Preserve documents and suspend routine deletion policies.
• Inform the board chair and counsel; consider a special committee for independence.
• Evaluate self-reporting, restitution, or other remediation steps based on counsel’s advice.

Related terms to review

• Board of Directors, Meetings of Board of Directors, Key Employee, Partner’s Interest in the Partnership, Firm Price

Note: State law varies. When in doubt, consult counsel familiar with your company’s home state and industry.

Summary Checklist

• Confirm officers are elected by the board and recorded in minutes or written consent
• Define each officer’s duties and signing authority in bylaws or resolutions
• Train officers on duties of care, loyalty, and good faith, and the business judgment rule
• Maintain accurate minutes, stock records, and an authority matrix
• Set financial controls: segregation of duties, dual approvals, and regular audits
• Use conflicts disclosures and independent reviews for related-party deals
• Keep up with state filings and, if public, federal reporting and certifications
• Put indemnification, advancement, and D&O insurance in place
• Plan succession for key officer roles and test coverage limits
• Act quickly and document steps if misconduct or control failures are suspected

Quick Reference