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Corporate law allocates to the board of directors the central role in the management of the American corporation. Three legal principles, taken together, coalesce to focus legal attention on corporate boards of directors. First, most states require board approval for important decisions. For example, organic changes to the corporate form such as mergers, sales of control, and sales of all or substantially all of a corporation's assets all require board approval. Second, by law, corporations are run by or under the direction of the board of directors. Courts have traditionally interpreted this requirement narrowly, and many board decisions are therefore considered nondelegable. Finally, at least in theory, boards of directors are ultimately responsible for corporate performance. Not only do directors owe shareholders a fiduciary duty of loyalty, they also owe shareholders a fiduciary duty of care. In essence, this means that directors must not only refrain from stealing from the corporation, but they must also attempt to maximize the economic value of the firm.
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