Understanding the Key Positions in Your Company After You Incorporate
Once you incorporate your business, your company will benefit from limited liability and corporate name protection, and it will enjoy certain tax and other benefits. However, once you incorporate, your business corporation will have three types of positions that will need to be filled by one or more individuals.
- Shareholders- Shareholders are the owners of the incorporated company. Although officers and directors have to be individual people, a corporation’s shareholders can be individuals or other corporations. Every corporation must have at least one shareholder who has the right to receive dividends, has the right to vote, and is entitled to receive the corporation’s remaining assets if it ever dissolves. Voting shareholders of your newly incorporated company have overall control of the business through their ownership of shares with voting rights. Voting shareholders have the right to elect and dismiss directors.
- Directors- The directors of a corporation are elected by the corporation’s shareholders. Directors oversee how the corporation is managed and vote on decisions about the company’s direction and major transactions. Every business corporation must have at least one director who must be an individual. In some jurisdictions, a certain percentage of directors must be residents of Canada. Directors can also be officers and/or shareholders of the company, and in some business corporations, one person is the sole shareholder, director and officer.
- Officers- Officers are appointed by the corporation’s directors. Their main purpose is to manage the business’ day-to-day operations. In most businesses that choose to incorporate, officers usually work in senior management positions. Officer titles can include Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, President, Vice-President, Secretary, and Treasurer. The minimum two officer positions that are normally filled by all incorporated companies are President and Secretary, but these titles can be held by one person.
Articles on this blog are general in nature and are provided for informational purposes only. Use of this blog does not provide or replace individualized legal advice and does not create a solicitor-client relationship with our firm. Users who require legal advice on a particular matter should consult directly with Mr. Eric Cohen, Barrister & Solicitor, an Ontario lawyer or a competent lawyer in their Province or State.