In their capacity as shareholders, the owners of a corporation have very defined, but limited rights. Their main responsibility is to annually elect the directors of the corporation. While this is a significant right in a publicly‑traded or large privately‑held corporation, in a small business corporation where there are commonly just 2 or 3 shareholders who are probably also the directors of the corporation, the annual election of directors is often just a ministerial task.
Shareholders are also given the right to vote on major changes in the corporation, such as a merger with another company, sale of substantially all of the company’s assets, any major change in stock rights, and dissolving (terminating) the corporation.
The directors set major policy of the corporation but, in this capacity, do not operate the business on a daily basis. Directors may have regularly scheduled meetings to approve or authorize actions by the officers or call special meetings for this purpose.
In a small business corporation, it is permitted (and quite common) to dispense with formal meetings of directors as well as shareholders. Every state permits action of shareholders and directors to be taken by simply preparing written consent minutes without a meeting and having the minutes signed by the shareholders and directors.
Every state requires at least a president and secretary and most states require a treasurer or chief financial officer as well. One person may fill more than one, or even every, office position. A single person corporation is not required to appoint a different person to any office position.
The principal officers run the corporation on a day to day basis. They are responsible for the hiring and firing and supervision of employees and other responsibilities of running the business, all in accordance with any parameters set by the board of directors. Officers are usually appointed by the board, not elected, and serve until they resign, die, or are removed by the board.
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