There are many references to the term “shareholders’ and ‘board of directors’ in films and on TV but you may not be aware of what those roles actually entail for a business. Both roles have distinct differences and a company needs to understand their differences to perform optimally.
Shareholders are the owners of companies in a collective sense, who elect the board of directors to run their company and watch for their investments’ interests. The board is legally obligated to rule on shareholders’ behalf and assist companies succeed. Sometimes, directors own shares in the company. However this is not common.
The board of directors formulates guidelines for the overall oversight of the company as well as management, and meets regularly to discuss and resolve problems. It is a major obligation of the board to be comprised of a variety of people who are knowledgeable and independent to oversee the operation of the company.
Directors are charged with making decisions for the www.boardroomdirect.org/what-does-it-mean-to-be-a-shareholder-in-a-private-company benefit of the long-term of the corporation, hiring corporate officers and managers who are responsible for running the day-today activities, and promoting the company’s vision to all employees. They are also responsible to ensure the financial health of the business by ensuring that its finances are in order and that there are no instances of fraud.
A shareholder is not able to directly influence or amend the decisions of the board. However, they are able to make their objections or approvals. Directors may also be removed from their positions within the company if they don’t violate their Shareholder Agreement and corporate bylaws.
