Duties of Corporate People
November 19, 2012
BUS670: Legal Environment
Every person within a corporation has a specific duty that they perform. Some of these employees have duties that are critical to the corporate process. These employees are the directors, officers and shareholders. The duties that each of these employees perform are crucial to the corporation. This paper will discuss what these people’s duties are and how they differ from a public company to a close company.
The major duty of the board of directors is to manage the corporation. In a public company this is nearly impossible because of other duties the board members have. Therefore the board of directors passes out the responsibility of managing to members of committees. These members manage under the direction of the board and carry out the responsibilities of the board in making sure the corporation is run properly.
Larger publicly held corporations have committees of the board. The committees of the board can make certain decisions but there are decisions that require the board approval. The Model Business Corporation Act (MCBA) regulates what decisions require board approval. According to Mallor, Barnes, Bowers, and Langvart (2010), the powers that may not be delegated to committees are “declaring dividends, filling vacancies of the board or its committees, adopting and amending bylaws, approving issuances of shares, and approving repurchases of the corporation’s shares” (p. 1049).
“Directors and officers are in positions of trust; they are entrusted with property belonging to the corporation and with power to act for the corporation.” (Mallor, 2010, page 1056) Directors of corporations have the responsibility to maintain the company’s profit levels. They have a direct responsibility to the shareholders for profits, return on investments, and money expenses. “Directors and officers are liable for...