How should I organize my board of directors?

The Board of Directors of a Company (the "Board") are the most important governance group of an entity. They are required to approve most major decisions of the Company. Most startups will have a Board consisting of one to three directors, and those typically are the primary founders of the Company.

Here are a few things to consider:

  • Since important actions (like raising money, issuing equity, etc.) normally require approval from the Board, it's easier (from a signature collection and paperwork perspective) to limit the size of your Board, and that's why more than three is uncommon for startups. One is simplest, though some states may not allow for a solo director. 
  • It is also recommended that there be an odd number of directors to avoid voting ties and stalemates on the Board. That said, having two founder directors is typically okay if you trust each other and are aligned. That way, when you need to add your first investor to the Board, you may be able to convince them to allow the founders to keep two out of the three seats.
  • If you choose to bring on a VC investor, the organization of your Board is subject to change. These investors will typically rearrange the Board (as a requirement to their investment), giving themselves at least one director seat. Sometimes they are okay with founders having two seats to their one seat, but they may require that investors have the same number of Board seats as the founders. If this is the case, they will want an additional seat being reserved for an independent or "mutual consent" director, to bring some outside perspective to the company and act as a tie-breaking vote as needed.
  • The founding Board may be required to drop a Board member (or two, if you started out with three founding directors) when investors join the Board.

You appoint your initial Board on Savvi as part of the Entity Setup workflow on Savvi, in the Action by Incorporator document. You can remove a director through Savvi through the Director Resignation workflow. You can add members to the board of directors through the Director Appointment workflow. 

Savvi Technologies, Inc. is not an attorney or a law firm, and can only provide self-help services at your specific direction. Do not rely on any documents or information from Savvi without consulting an attorney. Savvi may partner with or refer clients to licensed attorneys, but such referral does not constitute an attorney-client relationship until the attorney is officially engaged by the client.