Corporate Structure
A corporation is a form of business structure. The corporation is given the same basic rights and duties as an individual. This shields members from the corporation from some liability for the corporation's actions, but also prevents them from utilizing corporate assets in the same way that one would use personal assets. There are some differences between publicly held and privately held corporations; however the basic structure of a corporation remains the same regardless of how the corporation is held. There are three main groups in the corporate structure. The first group consists of the directors of the corporation. The second group consists of the officers of the corporation. The third group consists of the shareholders of the corporation. Individuals may belong simultaneously to more than one of these groups, but each group has different responsibilities.
The first group consists of the directors of the corporation. When forming a corporation, the directors are usually drawn from the group of people who form the corporation. However, the articles of incorporation will specify how directors are to be chosen; generally it is by election by shareholders. The board of directors is in charge of managing the corporation's actions. "The board of directors also has ultimate legal responsibility for the actions of the corporation and its subsidiaries, officers, employees, and agents" (Findlaw, 2011). The directors have a duty to act in the best interests of the corporation, to act with loyalty to the corporation and its shareholders, to participate in regular meetings, to engage in a certain amount of daily business for the corporation, and to amend the corporate bylaws or articles of incorporation (Findlaw, 2011)....
A board of directors may be of varying sizes; in fact, a board of directors may be composed of a single director. Generally, the board of directors will consist of two types of representatives: people from inside the company like and people from outside of the company. Moreover, board members can usually be divided into three categories. "The chairman of the board is responsible for running the board smoothly and effectively. His or her duties typically include maintaining strong communication with the chief executive officer and high-level executives, formulating the company's business strategy, representing management and the board to the general public and shareholders, and maintaining corporate integrity" (Investopedia, 2009). Inside directors are those directors that are part of the corporation's actual management team, and can provide internal perspective for the board of directors (Investopedia, 2009). Outside directors are not otherwise employed by the corporation and are able to provide an outside perspective for proposed actions (Investopedia, 2009).
The next group consists of the corporation's officers. While the board of directors retains ultimate responsibility for the corporation's actions, it is not generally involved in the corporation's day-to-day activities. Instead, "the corporation's officers oversee the business's daily operations, and in their different roles they are given legal authority to act on the corporation's behalf in almost all lawful business-related activities" (Findlaw, 2011). Not every corporation has the same group of officers. However, there are some positions that are found in most corporations. These positions include the chief executive officer or president, the chief operating officer,…
