What is the role of the shareholders of a corporation?
Shareholders hold ownership of the corporation in the form of shares and exercise their control through voting rights. Shareholders are passive owners. They are not obligated nor required to operate the day to day management of the business. Shareholders are free to sit back and receive the distribution of profit on an annual basis proportionate to their shareholdings.
What is the role of a director of a corporation?
Directors are responsible for managing the activities and business operations of the corporation and for making decisions regarding those activities. Directors approve budgets and important contracts. They also decide key matters relating to business operations such as hiring, firing, purchasing and sales, revenue models, risk and other key components to running a business. It is important to note that directors also determine when to declare dividends which are annual profit distributions to the shareholders. It is the directors, and not the shareholders, that manage the operations of a business.
What is the role of an officer of a corporation?
Officers are appointed by directors to manage certain subsets of a business. Whereas the board of directors have the purview of the entire corporation, officers are given a smaller slice of the corporation. For example, a Chief Marketing Officer’s purview is marketing only. The CMO reports back to the board of directors who manage the entire business and oversee all of its operations.
