For the corporate process to be effective as well as efficient, a number of people must perform a variety of duties or specialties. In this text, I concern myself with the duties of the directors of corporations, officers as well as the owner or shareholders of corporations. I also include an analysis of the main differences between a publicly held corporation and a closed corporation.
Duties of directors of corporations
There are quite a number of statutory obligations the directors of corporations are bound to perform as long as they sit on the boards of corporations. Te begin with, directors of corporations have a duty to avoid conflicts of interests. This essentially means that all those who serve as directors in a corporation must avoid scenarios where they may encounter a direct or indirect interest that may in one way or the other conflict with the company’s interest. Secondly, the directors of a corporation have a duty to exercise independent judgment. This essentially means that all their actions should be tailored towards benefiting the company and not themselves in their individual capacities. Next, directors have a duty o act within their posers. What this means is that directors must not act in contrary bestowed upon them by the memorandum as well as articles of association or otherwise.
Duties of Officers of corporations
According to Miller & Jentz (2009), the corporations day-to-day management and operations are performed by the Officers of corporations whose appointment is carried out by the board of directors. It is important to note that the duties of officers within a corporation vary with the position held by the officer. For instance, the duties of the chief executive officer of a corporation may vary with those of the corporations financial controller or manager. However, all the officers of a corporation have a duty to act in the best interests of the corporation while executing their mandate.
Duties of shareholders
When it comes to the shareholders, Emerson (2009) notes that the primary role of shareholders is to use their shareholder capacity to vote so as to pass resolutions during the annual general meetings or at any other time as may be required of them. This is essentially an important duty as it gives shareholders control of the management of the corporations various affairs. However, according to Miller & Jentz (2009) controlling shareholders have a duty of royalty to the corporation, that is, ensuring that the decisions made also take the views of the minority shareholders.
The differences between a publicly held and a closed corporation
There are a number of differences between publicly held corporations and closed corporations. While a closed corporation does not offer its shares for sale at the stock exchange i.e. its shares are not publicly traded, the shares of a publicly held corporation are readily available at the stock exchange where the public can freely trade in them (Emerson 2009). Further, it is important to note that a public corporation may have a big number of shareholders i.e. thousands and sometimes even tens of thousands while when it comes to closed corporations, the shareholders are characteristically few.
In conclusion, it is worthwhile to note that for corporations to function efficiently hey must interact wit the stakeholder group appropriately. This is essentially because while the directors, officers as well as shareholders of corporations are essential to the success of the corporation, it cannot effectively operate without interacting with the other stakeholders i.e. the suppliers, special interest groups as well as customers and regulatory authorities.
Miller, R.L., & Jentz, G.A. (2009). Fundamentals of Business Law: Excerpted Cases.
Emerson, R.W. (2009). Business Law. Barron’s Educational Series
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