When you form a new startup, very few people want to be on the board of directors except for the principals who are involved in the company. There is liability for being on the board of directors as well as a potential liability for being an officer in the company.  What we often do is what we call the “Directors and Officers Liability Insurance.” It is not inexpensive (thousands of dollars or more per year). Until you can afford that insurance, instead of putting people on the board of directors, put them in your board of advisors. The board of advisors is a consulting position where they can offer you advice and get some stock for doing it, but they don’t have liability to the other shareholders based upon being on the board of advisors versus being on the board of directors.

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