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Shareholders and the board of directors are two important elements in any company structure. Both have distinct roles, but they have the same objective: to ensure the success of the company and sustainability on the long-term. Understanding these roles and their interactions is crucial to good corporate governance.
The board of directors is an organization of people who are chosen by shareholders to supervise the company. They typically meet on a regular basis to decide on policies that govern the overall management of the company and oversight. In addition they handle the short-term decisions such as hiring or firing employees, signing an agreement with the provider as well as signing strategic partnerships and much www.boardroomdirect.org/advisory-board-guidelines-crucial-points more. The board’s primary role is to safeguard the investment of shareholders by ensuring that the business runs smoothly and efficiently.
While there are no legal requirements that directors be shareholders (in fact, the directors who are initially appointed may be listed in the Certificate or Articles of Incorporation, or chosen by the incorporator), they do have to have a significant stake in the company. They could be individuals or corporations. The board could be composed of any number of persons however most think that nine members are the ideal number. The board’s power comes from its bylaws, and the voting rights associated with shares.
Anyone can become a shareholder of any publicly traded company by purchasing stock. However in private firms with a shareholders agreement or bylaws, shareholders might have more control over who can be a shareholder.