Area of Law: Business Law
Answer # 224
Shareholders, directors and officersRegion: Ontario Answer # 224
Corporations are managed and directed by officers and directors, and they are owned by shareholders. Each of these groups has a different role and responsibility in the corporation.
Shareholders are the owners of the corporation. Shareholders of shares which carry voting rights, exercise their control through their votes. They elect the directors who guide and control the business operations of the corporation. Shareholders are also asked to vote on important issues, such as the sale or dissolution of the business. They generally do not participate in the day-to-day operation of the business unless they are also directors or officers. Shareholders also influence the control of the corporation through the purchase and sale of corporate shares.
Directors are elected by the shareholders to guide the business operations of the corporation. Directors select the officers who manage the daily business activities. Directors approve budgets and important contracts. They also decide when to issue shares, and when to declare a dividend.
Officers are the day-to-day managers of the corporation. Officers include the President and Vice-President of the corporation. The duties of the various officers are established by the directors and by the by-laws of the corporation.
The maximum and minimum number of directors is stated in the Articles of Incorporation. Each privately held corporation must have at least one shareholder, and at least one director. Typically, corporations have one or more officers who are approved by the directors. In a small corporation, it is possible for one person to hold all these positions and to perform all the duties. Often, however, when a corporation begins to grow, more people will be needed to manage and direct the corporation.
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