Introduction
A corporation is a legal body created according to the laws of a particular state or country (Emerson, 2009). Today, corporations are formed through registration unlike in the past when they were established through charters. There are different forms of corporations but most companies are public held corporations (Emerson, 2009).
Public held corporation is “a public traded corporation” and the shares of this corporation are traded on the public stock market (Emerson, 2009). The other type of corporation is the close corporation, which is the easiest to form; it is the simplest form of business ownership and many businesspersons prefer this form of corporation (Emerson, 2009). Small and medium enterprises fall in this category.
The main difference between public held corporation and close corporation is that, public held corporations are strictly managed; they have tight securities laws, require periodic disclosure, and have additional procedures requirements for business transactions compared to close held corporations (Emerson, 2009).
Discussion
Organizations have directors, officers, and shareholders and all of them perform different duties in the corporation. Directors in a corporation have a major responsibility to create and sustain long-term shareholders interest (Mallor, Barnes, Bowers, and Langvardt, 2010).
As such, corporate directors provide oversight of the organization’s progress in terms of development. Mostly, they ensure that all plans and projects recommended by the management are enacted through enough funding and they approve recommendations made by the management (Mallor, et al, 2010).
Corporation’s directors have a duty to understand the risks in any organization so that they can be able to plan adequately to ensure success of the company. Generally, corporation directors provide their services to the company in areas of management, decision-making, and leadership (Mallor, et al, 2010). In summary, they appoint CEO and other executive officers, implement plans, manage corporations, monitor finances, and approve major changes in a company (Mallor, et al, 2010).
On the other hand, corporation officers are responsible for management of daily activities in an organization. They are responsible for creating sales, maximizing customer services, and driving all financial matters in an organization (Emerson, 2009). Generally, corporation officers implement projects, appoints key managers, set standards for the managers, and they design the company (Emerson, 2009).
Because corporation officers are many, they have different responsibilities. For example, CEO signs all legal documents, attends board meetings, and oversees daily activities in the organization while the vice president fills in when the CEO is absent (Bhabatosh, 2004). Chief Financial Officer is responsible in managing all financial matters and maintains financial records while the secretary has a responsibility to maintain and update all company records.
The shareholders are also entitled to participate in issues of corporate governance. Although shareholder are not involved directly, they have made financial investment in a corporation and therefore they are entitled to elect directors in the organization and therefore directors are accountable to the shareholders at all times (Bhabatosh, 2004).
Since corporation directors are responsible for the management of the company, some issues require shareholders approval within the organization. As such, shareholders are responsible for approval of restructuring or reorganization of the company, selling of the company’s asset, increasing or reducing numbers of directors in a company, amendments of the corporation share capital, and changing laws concerning shares ownership (Bhabatosh, 2004).
Conclusion
As observed, corporation directors, corporation officers, and shareholders all have unique responsibilities in an organization. It is necessary to understand that each role is very important and must be performed well to ensure that the company achieves the set goals to be successful.
References
Bhabatosh, B. (2004). Fundamental of financial management. Dewai: PHI Learning Pvt. Ltd.
Emerson, R. (2009). Business Law. New York: Barron’s Educational Series.
Mallor, J. P., Barnes, A. J., Bowers, T., & Langvardt, A. W. (2010). Business Law: The Ethical, global and ecommerce environment. (14th Ed). New York: McGraw Hill.