The number of directors a corporation has to have is addressed in Section 212 of the California Corporations Code. The Corporations Code allows you to set a board with either a fixed or flexible number of directors. Scroll down to see Corporations Code Section 212 in its entirety.
For example, your Articles of Incorporation and/or Bylaws can require that your board have only 3 directors (a fixed board). Or these documents can say, for example, that the board can have between 3 to 5 directors (a flexible board).
Minimum Number of Directors
The minimum number of directors a corporation has to have depends on the number of shareholders in the company. There is no maximum number in a fixed board.
- One director minimum – If the company has only one shareholder, the minimum number of directors the company has to have is also one.
- Two director minimum – If the corporation has two shareholders, the minimum number of directors the corporation mus have is also two.
- Three director minimum – Corporations with more than two shareholders must have at least three directors.
Maximum Number of Directors in a Flexible Board
Instead of a fixed number of directors, the corporation can be set up to have a flexible number of directors, with the exact number of directors to be decided by the board or shareholders.
Corporations Code Section 212 states, however, that the maximum number of directors designated for a flexible board cannot be more than twice the minimum, minus one. For example, a flexible board of between 3 and 5 directors is okay, but a flexible board of between 3 and 6 is not. A board of between 4 and 7 directors will work, but one between 4 and 9 will not.
California Corporations Code Section 212 (Retrieved September 2012):
(a) The bylaws shall set forth (unless such provision is contained in the articles, in which case it may only be changed by an amendment of the articles) the number of directors of the corporation; or that the number of directors shall be not less than a stated minimum nor more than a stated maximum (which in no case shall be greater than two times the stated minimum minus one), with the exact number of directors to be fixed, within the limits specified, by approval of the board or the shareholders (Section 153) in the manner provided in the bylaws, subject to paragraph (5) of subdivision (a) of Section 204. The number or minimum number of directors shall not be less than three; provided, however, that (1) before shares are issued, the number may be one, (2) before shares are issued, the number may be two, (3) so long as the corporation has only one shareholder, the number may be one, (4) so long as the corporation has only one shareholder, the number may be two, and (5) so long as the corporation has only two shareholders, the number may be two. After the issuance of shares, a bylaw specifying or changing a fixed number of directors or the maximum or minimum number or changing from a fixed to a variable board or vice versa may only be
adopted by approval of the outstanding shares (Section 152); provided, however, that a bylaw or amendment of the articles reducing the fixed number or the minimum number of directors to a number less than five cannot be adopted if the votes cast against its adoption at a meeting or the shares not consenting in the case of action by written consent are equal to more than 16 2/3 percent of the outstanding shares entitled to vote.
(b) The bylaws may contain any provision, not in conflict with law or the articles for the management of the business and for the conduct of the affairs of the corporation, including but not limited to:
(1) Any provision referred to in subdivision (b), (c) or (d) of Section 204.
(2) The time, place and manner of calling, conducting and giving notice of shareholders’, directors’ and committee meetings.
(3) The manner of execution, revocation and use of proxies.
(4) The qualifications, duties and compensation of directors; the time of their annual election; and the requirements of a quorum for directors’ and committee meetings.
(5) The appointment and authority of committees of the board.
(6) The appointment, duties, compensation and tenure of officers.
(7) The mode of determination of holders of record of its shares.
(8) The making of annual reports and financial statements to the shareholders.