A corporation is the most expensive way to organize a business. Its setting up is a long and difficult process that begins with the share issue. Nevertheless, the corporations have the considerable advantages that make them the strongest and the most powerful form of the business, ensuring the greatest profits. The stockholders own the corporation, but they do not necessarily work in it. The business is often run by the directors, who are often called-in executives (Drucker, 1993). Thus, the corporation management includes the following three groups: the corporate officers,the board of directors and the shareholders. Each category has its own duties and powers.
The board of directors usually includes not less than three persons, who are elected by the shareholders of the corporation. Regardless of the corporation’s type, its duties and responsibilities depend on the corporate charter and the authority. The executive board is given the mandate to oversee the overall running of the corporation. It is responsible for the corporate policy, the existing corporate laws and the rules of conduct; the election or appointment of new corporate officers, their salary and compensation under the bylaw; the asset transactions (purchase or sale); the control over the work of chief officers; the budget approval.
The corporate officers occupy the senior managerial positions and are responsible for the day-to-day activity of the organization. The duties of the chief executive officer contain the making of contracts on behalf of the corporation and the legal documents custody. In its turn, the obligations of the chief financial officer comprise the supervision of financial records, the preparation and presentation of financial statements to the shareholders, the board of directors and other officers of the corporation. The treasurer is charged with the provision of the documents that involve any transactions with the banks or financial institutions. The secretary is accountable for preparing the legal documents for the board and the shareholders’ meetings (Forrester & Ferber, 2010).
The shareholders are not the immediate superiors, but they can oversee the corporation through the board of directors. What is more, the owners have the right to attend their meetings, which are nominally the supreme governing body of the corporation. They are in authority to elect the board of directors, approve the general performance of the corporation and provide the stock capital. The responsibility of every shareholder is limited, as he/she is accountable only for the amount of his/her investment. Those shareholders, who hold more shares, have more votes in the annual shareholders’ meetings. As a result, they have a greater impact on the decision-making process (Bhattacharya, Sen & Korschun, 2011).
The corporations may be public with an unlimited number of shareholders and shares. In this case, the shares are traded freely at the stock exchange by the brokers. Hence, the ownership rights can be easily passed on to others. There is also the opportunity to obtain large flows of capital for the business. The close held corporations are owned privately. They have a limited number of shareholders, and their shares are not sold by the brokers at the stock exchange. Only stockholders have the right to sell them. Therefore, the shares are rather transferred to a limited circle of partners than to the public sector that provides the access for everyone. Compared to the publicly held corporation, the closely held company is not required to provide their annual reports to the owners (Holzer, 2010).
In conclusion, the corporate directors, officers and shareholders are the key figures of the corporation. The board of directors is elected annually by the shareholders. The officers are hired by the corporation and appointed by the board of directors. In fact, the shareholders are the investors and the owners of the corporation. Nevertheless, they usually put the responsibility of decision-making on the corporate directors and officers. The difference between the publicly held and the close corporations lies in the organizational peculiarities. As a consequence, the publicly-held corporations have access to the larger amounts of money. At the same time, they are regulated more strictly than the close corporations.