We all interact with corporations on a daily basis. Have you been to Wal-Mart lately or bought gas from an Exxon station? We all talk about corporations, and we usually have an opinion when it comes to corporations, but do we all really understand the structure of a corporation? Do we know who the key players are or what their roles are? The structure of a corporation differs from state to state, but the similarities between then outweigh the differences. In order to gain a better understanding of how corporate structure lets take a look at some of the major role players in a typical corporate structure.
Who are the key players in the corporate structure?
Incorporators
Shareholders
Directors
Officers
Employees
Incorporators
The incorporators are the people who create the corporation. You can have a single incorporator or several. It is their job to file the articles of incorporation with the state and set up the corporation. After the filing of the articles the incorporators will select the board of directors and adopt the bylaws. After this, their task is usually finished.
Shareholders
The shareholders are the owners of the corporation. They own the stock of the corporation and sometimes one individual owns all of the stock. Because shareholders are the owners they have a lot of power over how the corporation is run. For example, shareholders can:
Elect the directors
Amend bylaws
Approve the sale of all or most of the corporate assets
Approve mergers and reorganizations
Amend articles of incorporation
Remove directors
Dissolve the corporation
Directors
The directors are at the top of the managerial chain in a corporation. They get to make major policy decisions, authorize the issuance of stock and elect the officers of the corporation. Directors have to hold regular meetings to meet the demands of running the corporation. The incorporators or shareholders choose the number of directors for the corporation.
Officers
The officers are responsible for the day-to-day running of the corporation. Usually a corporation will have a president, secretary and a treasurer. Many states require certain types of officers. The president is typically the chief operating officer of the corporation. The secretary is normally responsible for the record keeping and the treasurer is in charge of accounting and corporate finances.
Employees
Employees work for the corporation in return for compensation. Sometimes the owners are also employees in smaller corporations.
Conclusion
Although we interact with corporations daily, we often do not understand their structure. A typical corporation is required by law to have incorporators, shareholders, directors and officers. Each has an important and different role in the corporation that ensures it’s smooth operation. In order to find out the exact structure in your state contact a corporate attorney.[1]
[1] Fred S. Steingold, Legal Guide for Starting and Running a Small Business 50-52 (Betsy Simmons ed., Nolo 10th ed. 2008).
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