Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only. If you need legal advice with respect to drafting or reviewing Articles of Incorporation, you should seek professional assistance (e.g. make a post on Dynamic Lawyers). We have Toronto business lawyers registered on the website who can answer your questions or help you draft and submit articles of incorporation for Ontario or Federal corporations.
Incorporating a business: a few words should be written about the roles and responsibilities of those involved with and acting on behalf of or for the corporation.
A corporation is created by having the initial directors file articles of incorporation in the jurisdiction in which the corporation is going to have its head office (provincial licenses will also be required to operate the corporation in particularly provinces).
After this, the directors have got a few things to do to get the corporation organized and up and running. For example, they will need to pass a By-Law (which gives the corporation’s directors power-making authority), pass director resolutions, issue shares to shareholders (and have the shareholders subscribe to shares), have the shareholders ratify the by-law, have the shareholders vote in the new directors, etc. Without these essential steps and documents, a corporation is not a legally operational entity.
The board of directors is comprised of individuals and typically a chairperson who oversee the affairs of the corporation , but not typically on a day-to-day basis. The directors are typically paid to sit on the board, but it’s not a lot of money (as compared with the corporate officers) because they don’t meet that often and are not responsible for the day-to-day affairs of the corporation (as officers are). The board is typically comprised of individuals with expertise in certain areas and who sit on a number of corporate boards. They offer their insight and are accountable to the shareholders who vote them in.
For their part, shareholders are the owners of the corporation and have the power to vote in the directors of the corporation. If there is only one sole shareholder holding all of the shares of the corporation then that person could vote in all of the directors. It is possible to have only one shareholder and one director of a corporation.
Finally, officers of a corporation are appointed by the board of directors in order to oversee the day-to-day management of the corporation’s affairs. The titles of officers are not that important, although traditionally most people have come to know officers as one of the following: President, Chief Executive Officer, Treasurer, Chief Financial Officer, Secretary, Vice-President, etc. It does not really matter what these individuals are called. Often, their titles, roles, and responsibilities will be outlined in a corporate by-law, which establishes their position and sets out their qualifications, powers, duties, etc. Officers can be replaced by the board of directors, to whom they are accountable.
So to summarize: shareholders with voting power will vote in the directors on an annual basis (or sooner in certain circumstances), directors have the power to manage the corporation and they meet only a few times a year, and officers (e.g. CEO, VP, CFO, Treasurer, President, etc.) are the people who run the corporation on a daily basis and who are appointed (not elected) by the directors on an annual (or sooner in certain circumstances) basis.
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