They are held responsible by the CEO. The shareholders of the corporate are the legal owners of the corporation. In most cases, they do not actively control the corporation, but rather are responsible for appointing the board to oversee the corporation on their behalf. The shareholders as owners have some entitlement to profits from the company, but the terms of that profit distribution are generally decided by management when it announces its dividends. The shareholders do have a small handful of legal responsibilities. They elect the board. They also vote to approve the auditors. Occasionally, such as when Arthur Andersen collapsed, shareholders may be compelled to vote outside of normal shareholder meetings. The shareholders also have certain rights of ownership such as the rights to the proceeds from the dissolution of a company, should there be any.

The above definitions apply primarily to public corporations. These roles may differ in privately-held corporations. The shareholders, for example, are more likely to play an active role in the governance of the company, in particular...

Directors in private corporations may perform similar roles to those of public corporations, but they may not have as strong an influence as proxies for the shareholders if the shareholders themselves are active in the management of the business. Their role may be characterize more as collaborators with shareholders and managers than skeptics and overseers (Raymond, 2005) Some private corporations may do away with directors altogether. The general function of the officers remains the same in private corporations, including their duty of care to the shareholders.
Works Cited:

eNotes. (2010). Agency theory. eNotes. Retrieved September 24, 2010 from http://www.enotes.com/biz-encyclopedia/agency-theory

Raymond, D. (2005) Independence and the private company: Adopting Sarbanes-like rules on director independence would impair the smooth function. Entrepreneur. Retrieved September 24, 2010 from http://www.entrepreneur.com/tradejournals/article/135241457.html