The Organizational Structure of a Corporation
UPDATED: June 19, 2018
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Corporations can have many structures, but the most typical corporation organizational structure consists of the (1) board of directors, (2) officers, (3) employees, and (4) shareholders or owners. There is no limit -- your corporation can have as many as are desirable or expedient to do business. On the other end of the spectrum, one individual can simultaneously be the sole shareholder, the director, the officer, and the employee. You can have as many or as few people necessary to conduct business in a corporation.
Board of Directors' and Officers' Role in a Corporation
The primary responsibility of the board of directors is to protect the shareholders' investment. The board--which may be one person (typically in one shareholder corporations) or as many as the By-Laws provide for-- are elected by the shareholders for this reason. The board of directors reports on the business’s success and progress to the shareholders, normally via an annual or quarterly report. While not involved in the daily operations of the business, they set its mission and structure. The board of directors is responsible for drafting and amending the company by-laws and appointing committees as necessary. They, along with officers, are protected from the company’s liabilities.
The board appoints the officers. The officers are the President or CEO (chief executive officer), one or more Vice-Presidents, the Treasurer and the Secretary. (In larger enterprises, there may be hundreds of officers.) These people report to the board of directors. They are responsible for normal everyday business operations. Their main responsibility is to act in the best interests of the corporation. This may or may not always align with the board of directors' wishes.
The Employee's Role in a Corporation
Employees make the business run. They carry out the various tasks associated with the company's mission. Employees report to the officers of the company.
Shareholders' or Owners' Role in a Corporation
The shareholders own the corporation. That ownership may be 100 percent in the hands of one individual, divided within a family or a few individuals, or spread among tens of thousands or millions. Though shareholders may not participate in day-to-day management or have a direct say in decision-making, major shareholders nonetheless carry great weight in influencing corporate decisions. This group routinely votes on the election and removal of directors, amending by-laws, major corporate changes (mergers, sales, dissolution), disposition of corporate assets, and amendment of the Articles of Incorporation. Other shareholders may participate in these activities, but to a lesser extent. The level of shareholder influence on the board of directors is one of many things to consider when forming a new corporation.