The professional roles within a corporation can be as complex as the corporation itself, so it’s easy to get confused (especially when one individual plays more than one role).
What follows is an overview of the basic distinctions in the corporate business structure.
Shareholders are simply the people who have invested in a corporation. In return for their investment, they receive shares or stock in the company (hence the name “shareholder”) which are given a set value. Basically, the shareholders collectively own the corporation, and they usually vote on major issues facing the business and elect its board of directors. A corporation doesn’t need to have more than one shareholder, a situation common to newly-formed corporations.
Board of Directors
A board of directors is a corporation’s governing body, which basically means the board sets the company’s policies and oversees its officers. Boards of directors are typically charged with tasks like establishing the company’s compensation policies, hiring the CEO and other officers, evaluating officers’ performances, and determining dividends.
Some corporations have vast numbers of officers and positions with titles like Chief Investment Officer, Chief Information Officer, and Chief Operating Officer (the list goes on and on), but there are several officer positions that all corporations need to be filled—even if it’s a smaller corporation where one person performs each role. These positions include:
Chief Executive Officer (CEO) or President
The CEO oversees and manages a corporation’s daily operations. The CEO’s signature is typically required on important company documents, such as business contracts and other binding legal documents, as well as on the stock certificates issued to shareholders.
Chief Financial Officer (CFO) or Treasurer
As the title implies, the CFO is in charge of a corporation’s finances. In smaller corporations, the role’s responsibilities may focus on things like payroll, paying and collecting on bills, and tracking how and where money is being spent and earned. In larger corporations, this role tends to focus on greater oversight of financial operations.
The Secretary tracks official corporate records and keeps minutes for board and shareholder meetings. The Secretary also makes sure the company and its board of directors complies with all relevant regulations and bylaws. In many corporations, the Secretary (as well as the other officers) has a place on the board of directors.
As indicated above, some positions, especially in smaller corporations, are filled by the same people. In a single-person corporation, one person fills all the roles. The larger the corporation, of course, the greater the demands will be on each position.