A company director does not have to be a stockholder (shareholder) or an employee of the firm, and may only hold the office of director (see qualifications for directors). Directors act on the basis of resolutions made at directors' meetings, and derive their powers from the corporate legislation and from the company’s articles of association.
As the company's agents, they can bind the company with valid contracts entered into with third-parties such as buyers, lenders, and suppliers (see powers of directors). Directors are the trustees for the firm and not for individual stockholders, but they may be sued by the stockholders as personally liable for the consequences of the acts that are fraudulent or beyond their vested powers. Also, whether appointed validly or not, they are individually and collectively liable for the acts and/or negligence of the firm. (see liabilities of directors).