The shareholders of a corporation are the investors who receive ownership in the corporation in return for the money or assets they invest. The shareholders elect a Board of Directors, which has overall responsibility for the business. The Board in turn elects the officers of the corporation, typically a Chief Operating Officer or President, Vice President, Secretary, and Chief Financial Officer, to handle the day-to-day affairs of the corporation.
The Board of Directors has the overall responsibility for the corporation. The directors must act in accordance with the best interests of the corporation and its shareholders. They have a fiduciary relationship with the corporation, which is founded in trust and confidence. The Board is required to hold annual meetings, but usually meets more often than that.
The Board initially:
Adopts Bylaws Designates the principal business office Elects officers Selects the fiscal year Designates the corporation’s bank or banks Issues initial stock to shareholders Pays organizational expenses Authorizes initial agreements
On an ongoing basis, the Board will:
Issue securities Adopt a Stock Option Plan Amend Articles of Incorporation or bylaws, as necessary Enter into major contracts, leases, or other obligations Declare distributions, dividends, or stock splits Borrow significant sums of money Enter into employment agreements with key employees Elect officers of the company Adopt or amend employee benefit plans Call shareholders’ meetings Buy or sell significant assets Adopt company policies.
The officers, who are elected by the Board of Directors, handle the day-to-day management of the corporation, along with the employees of the corporation.
For more information on this subject, read the AllBusiness.com Step-by-Step Guide to Incorporating a Business.