Shareholders and the Board of Directors

The board of directors and shareholders are both vital components of the structure of any business. Although they have different roles, they share the same goal of ensuring the company’s success and sustainable in the long run. Understanding these roles and their interactions is crucial to ensuring good corporate governance.

The board of directors is a group of individuals who are elected by shareholders to supervise the company. They usually meet regularly to establish policies for the overall supervision and management of the business. Additionally, they take care of the short-term decisions like firing or hiring employees, getting into an agreement with a supplier as well as signing strategic partnerships and many more. The main role of the board is to safeguard the shareholders’ investment by ensuring that the company is operating smoothly and efficiently.

While there isn’t any legal requirement that directors be boardable reviews shareholders (indeed, the initial directors are listed in the Certificate of Incorporation or Articles, or chosen by the incorporator) Directors must hold a significant stake in the company. They can be individuals or corporations. The board may be made up of any number of persons however, most people consider nine members to be the ideal. The power of the board is derived from its bylaws and voting rights associated with shares.

In a company that is publicly traded, it’s simple for anyone to become a shareholder by the purchase of shares. In private companies, where there are shareholders’ agreements or bylaws in place and the shareholders have more control.