Within stock corporations there are basically 2 types of corporations: (i) public, and (ii) private, or closely-held. Public corporations are the ones we generally hear on the news, like Microsoft Corporation, GE, Ford, Google, etc. Public corporations are traded on a national trade exchanges like the New York Stock Exchange. In order for a corporation to "go public," that corporation must meet many stringent requirements and generate a great amount of revenue (in the multi-million dollar range).

In contrast, private corporations are "private" because they are not traded on a national trade exchange. Instead, private corporations are generally smaller than public corporations and often have less formal rules to follow. For example, in public corporations directors generally cannot agree to vote a particular way on business issues before the issue is presented to the Board. However, the Board of Directors on private corporations can generally agree to create contracts or vote a particular way, as long as there is no harm to: (i) the general public, (ii) creditors of the corporation, or (iii) minority shareholders, i.e. shareholders with a small amount of interest in the corporation.

With that said, many of the same general rules apply to Boards of Directors in public and private corporations. For example, the duties of directors, how directors are elected, and how directors’ meetings are conducted tend to follow a similar format.

Next, we’ll take a look at directors’ duties for the corporations they represent.