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LSDefine
Simple English definitions for legal terms
affiliated director
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A quick definition of affiliated director:
Affiliated Director: An affiliated director is a person who is appointed or elected to sit on a board that manages the affairs of a corporation or organization but has little or no direct interest in the corporation. They are also known as outside directors. Unlike inside directors who are also employees, officers, or major shareholders of the corporation, affiliated directors are not involved in the day-to-day operations of the company. They are appointed to represent the interests of the public or a special-interest group, such as preferred stockholders.
A more thorough explanation:
An affiliated director is a member of a corporate board who has little or no direct interest in the corporation. They are also known as an outside director. Unlike inside directors, who are also employees, officers, or major shareholders of the corporation, affiliated directors are independent and not involved in the day-to-day operations of the company.
For example, a retired CEO of another company may be appointed as an affiliated director to provide an outside perspective and bring their expertise to the board. Another example is a director elected or appointed to a corporate board to represent a special-interest group, such as the preferred stockholders.
These examples illustrate how affiliated directors bring diverse perspectives and expertise to the board, which can help improve decision-making and prevent conflicts of interest.