Types of Corporations
Three key people in a Corporation
Owners of a corporation. Can receive a certificate from the corporation showing the number of stocks they own.
Board of Directors
Ruling body of the corporation.
The top executives of a corporation.
Three key people of a Corporation
Directors, however, are a little lower than the stockholders but are still needed when it comes to owning a corporation. The directors are appointed and voted on by the stockholders to see who fits the position well. These directors are the managing oversight of the business owning up to responsibilities such as developing plans and policies for the business as well as appoint officers to carry out these plans. There are usually around 10 to 25 directors depending on the size of the corporation. They are often from outside the corporation and are usually executives from other businesses or nonprofit organizations.
Officers of a corporation consist of a president, a secretary, and a treasurer. If a corporation is large enough there can be a vice president in charge of certain areas (i.e marketing, finance, and manufacturing). The top officer of a corporation is known as the CEO (chief executive officer) and the head financial officer if known as the CFO (chief financial officer).
Certificate of Incorporation
Prepare a balance sheet or statement of financial position for your corporation.
Ownership of a corporation is evidenced by the issued capital stock.
Each owner will have a certain amount of votes on matters arising in the meetings of the stockholders.
Key Components to a Corporation
Ownership of a corporation requires people who are willing to split the shares and stock of that said corporation. Let's say one corporation has three stockholders. These stockholders are then owning the business, but sharing the stock market of the business equally. Each of the stockholders are in charge of electing the officers and directors.
Voting rights in a corporation are somewhat similar to when we vote for a new president or state official. Each of the owners have a certain amount of votes they can use if they think that certain thing or person can help make the business a success. When one stockholder cannot make it to one of the meetings then they can send a proxy in their favor. A proxy is a written authorization for someone to vote on behalf of the person signing the proxy. The proxy representing the stockholder who is unable to make it can be submitted through phone, Internet,or mail.
These corporations have been said to continue to operate indefinitely, or as long as the term stated in the charter. Even though a corporation has its ups, they also have their downs. The corporation is subject to more taxes than a proprietorship or partnership may have. In relation to the many taxes that corporations face (ie. filing taxes, organization taxes, annual state tax, and federal income tax), they also face a double taxation on the profits that are distributed to stockholders as dividends.
Corporations also face government regulations and reports. Regulation of corporations by states and the federal government can be extensive at times. Managers are in charge of making sure he corporation files special reports with the state as well as with other states in which they conduct their business. Federal government; however, requires that firms whose stock is publicly traded to publish financial data.
By law, stockholders are to be informed of corporate matters, notified meetings, and are to be given the right to vote on important matters. Each time a share of stock is bought or sold detailed records must be kept
This occurs when an agent, or someone who works for another, pursues their own interest over their employers. Manager could try and persuade the board to increase pay causing the diminishing returns to stockholders.
A corporation is only allowed to engage in the activities stated in the charter. Before they became a corporation, as a partnership the owners could have added another line of merchandise without government approval.