Basic Structure of a Corporation

There are three basic groups that are needed in order to have a successful structural corporation: directors, shareholders and officers.

A corporation is owned by the shareholders. However, they do not directly manage the corporation itself. Instead, their influence is seen in the directors and management they elect for the running of their corporation. They make corporate decisions through the people they have managing the corporation. They indirectly have their way through methods such as approving or disapproving amendments to the articles of incorporation, voting on major corporate issues and again voting in or removing managerial people.

The directors, who make up the board of directors, are generally responsible managing the affairs of the corporation. For most corporations, directors are those who make the major business decisions (directly) and they also appoint and supervise the officers who usually run the day-to-day decision making of the corporation. Only one director is the requirement in most states, but you have the option to elect more to the board of directors. Some states actually use the number of shareholders the corporation has to determine the minimum number of directors. For example, if the corporation has three shareholders then usually they are required to have three directors as well. If the corporation has less than three shareholders, then the number of directors may equal the number of shareholders.

The officers, like I said above, are typically directly appointed by the directors of the corporation. They are responsible for the everyday management of the corporation.

Additionally, it is not unlikely that a shareholder may serve on the board of directors or as an officer. This is not uncommon at all. Actually, in most states it only takes one person to form a corporation. Yes, it might be a little hectic playing the one man game, but legally, it’s allowed!