Duties of Corporate Managers
This essay will discuss the duties and responsibilities of the key figures in corporate business including corporate directors, officers and shareholders. This essay will also focus on the differences between a close and a publicly held corporation. A corporation is a complex organizational unit, and its activity is certified and approved by the government. The majority of corporations imply a large number of employees and other resources that need to be managed by a professional leader (Mallor, Barnes, Bowers & Langvardt, 2009).
The role of corporate directors of today has significantly grown from what it used to be just a few decades ago. Now they have to combine their skills and experience with flexibility and profound knowledge that is relevant to what is going on in the company (Witzel, 2010). The typical list of corporate director’s responsibilities includes (Forrester & Ferber, 2011):
- Following the principles of “Duty of Care” at all stages and times of business development representing the company in the best way;
- Following the principles of “Duty of Loyalty” by demonstrating loyalty to the shareholders and the company in general;
- Having board director meetings at a regular basis;
- Following the guidelines of “Business Judgment Rule”;
- Controlling the corporate and financial activities of the company by signing contracts and agreements;
- Choosing new corporate officers;
- Approving asset transactions (sale or purchase);
- Introducing new corporate policies;
- Improving the existing corporate laws, rules of conduct and regulations.
The number of corporate directors chosen depends on the organization type and number of departments but generally this exact number is stated in the incorporation articles (Forrester & Ferber, 2011). The Board of Directors is elected annually by the shareholders, and this organizational unit acts as one entity responsible for all company’s activities and representing it in the best chosen manner.
Officers of corporations are specifically hired by the corporation and appointed by the Board of Directors. The responsibilities of the corporate officers depend on the corporate regulations dedicated to their authority. Express Authority responsibilities are stated in the officer’s contract with the company (Mallor, Barnes, Bowers & Langvardt, 2009). These are the responsibilities that the officer actually has. Implied Authority includes all the responsibilities that are not directly stated in the contract but are necessary and normal for the company’s office (Forrester & Ferber, 2011). It means that the instruments that they choose to achieve their goal (for example, track financial activity or make corporate records) are not limited. They also need to adhere to the principles of “Duty of Care” and “Duty of Loyalty” completing the assigned tasks. The president of the corporation is frequently called COO (chief operating officer). Another corporate manager is the secretary that makes all important corporate records, and the treasurer specializes in corporate finances (Witzer, 2010).
Shareholders of corporations assume shares in the corporation, so their business participation is usually not the case. Shareholders are money investors and are interested in the profitability growth of the organization. The corporate directors usually provide their month and annual reports of financial activity and development to the shareholders. The shareholders are, in fact, owners of the corporation but they put the responsibility of decision-making on the corporate directors and officers. That is why typically shareholders are the ones to select corporate directors every year (Mallor, Barnes, Bowers & Langvardt, 2009).
The difference between publicly held corporation and a close corporation lies in the organizational peculiarities. A close company is a private business owned by a relatively small number of shareholders, and the shares (apportioned ownership interest) are not traded in the public sector for everyone’s access as they are rather traded privately to a limited circle of partners (Witzel, 2010). Meanwhile, a public company is permitted by the government to offer its stock and bonds (or any other legitimate securities) to the general public for sale and purchase. This is usually done using stock exchange that makes fundraising and attracting investments possible (Forrester & Ferber, 2011). Private enterprises are enabled with the opportunity to obtain large flows of capital for their business. Shareholders are the ones to make the final decision about financial management in public companies on an annual meeting (Mallor, Barnes, Bowers & Langvardt, 2009). As a result, publicly-held corporations have access to larger amounts of money but they are also regulated with more severity.