Corporate Process essay

This paper is meant to discuss the respective duties of individuals crucial to the corporate process: directors, officers and shareholders of corporations. Additionally, this paper states the dissimilarity between publicly held and closed corporations.

Directors, Officers and Shareholders of Corporations

There are three major groups in the corporate organization. The initial group consists of directors of the company. The second group comprises the officers of the organization. The third group includes the shareholders of the corporation. People may belong to more than one of the groups at the same time, but every group has dissimilar duties and accountabilities.

Shareholders are the owners of shares in the corporation (Larson, 2010). Depending on a nature of the shares, the shareholder can normally take part in votes to choose or remove the directors, to amend corporate bylaws or articles of incorporation, to reorganize or merge a corporation, or to dissolve a corporation and liquidate the assets. The shareholders have ownership interest in the organization, by having finances invested in the corporation. Share is the apportioned ownership interest in the company (Witzel, 2010). Corporations are required by the law to hold yearly shareholder gatherings, at which the shareholders elect the directors.

When creating a new corporation, the directors are often drawn from a group of individuals who form the corporation. Still, articles of incorporation identify how directors are to be selected; usually it is by election by shareholders. The directors are in charge of controlling the company’s actions. The board also has legal accountability for the actions of the organization, its subsidiaries, personnel, officers, and agents (Witzel, 2010).

Directors often engage in action comprising the election of the corporate officers, an issuance of stock, supervision and support of the main financial transactions, and approving the compensation packages for officers and executives. In the small corporations, most of the shareholders serve as directors (Larson, 2010). The responsibilities and duties of the directors are as follows:

• Always acting on behalf of the company and its finest interests with the proper “duty of care”;
• Acting with loyalty to a company and shareholders;
• Taking part in regular gatherings of the board of directors;
• Approving some corporate transactions and activities – counting the contracts and agreements; asset purchases or sales, approval of novel corporate policies; election of novel corporate officers;
• Amending the company’s bylaws or articles of incorporation.

Officers oversee the every day operations and actions. The majority of states demand that a corporation have a Secretary, President, and Treasurer. Basically, President has the right to direct business, Secretary has control over the corporate records, and Treasurer has control over the corporate finances. The majority of states permit a company to appoint one individual to all these positions. In a small company, the shareholder can serve as director and officer (Larson, 2010).

Publicly Held and Closed Corporations

The dissimilarities among publicly held and closed corporation are as follows. Privately held organization or close company is a business owned by comparatively few shareholders or the organization’s members which does not suggest or trade company shares to general public on a stock market exchanges, but the firm’s stock is owned, suggested, and exchanged or traded in private (Humbach, 1972).

Public organization or publicly traded company is an organization, which has consent to suggest the securities (stock or bonds) for trade to public, usually with the help of stock exchange, or infrequently an organization whose stock is sold over counter (OTC) through the market workers who utilize the non exchange quotation services. It can increase funds and capital through sale of the securities. This is the ground publicly traded companies are crucial: before their appearance, it was extremely complex to get substantial amounts of capital for the private companies. Shareholders have ultimate say in all decisions by publicly-traded firm and its managers, in particular through the annual shareholders’ gathering. Publicly-traded organizations have larger access to financing than other corporations, as they have the capability to issue much more stock (Humbach, 1972). Nevertheless, they are subject to larger regulation.

So, basically, the major dissimilarity between closely held business and publicly held organization is that the closely held organization has a tight knit grouping of shareholders, which make up an ownership committee for the organization, whilst the publicly held organization is one that is owned by the stockholders.

Conclusion

Thus, this paper discussed the respective duties of the individuals vital to a corporate process: the directors, officers and shareholders of corporations. Also, it depicted the dissimilarities between publicly held and closed organization.