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l How to definecorporate directorl How to definecorporate officerl How to identifyshareholders’ rightsl How to identifyshareholder votingtechniquesUnderstanding thenature of corporatemanagement will helpyou protect your rights asa corporate shareholder.l directorsl officersl shareholderl proxyl voting trustl pooling agreementl shareholder proposall direct suitl derivative suitManaging theCorporationCorporate ManagementA corporation is just a legal concept: an artificial “person” createdby the state and given many rights, powers, and duties. Managing a corporationis not simple. Unlike a sole proprietorship or a partnership, inwhich power is concentrated in the hands of a few individuals, power ina corporation is scattered among many individuals and institutions.Board of DirectorsCorporations are managed by a group of directors , who meet andvote as a board to set the policies. They are responsible for seeing thatthe corporation acts within its powers. The board might also suggestbusiness policy. For example, it may decide to buy a new business siteor build a new factory. It might vote to produce a new product or institutea new pension plan for employees. The board also oversees a widerange of employee-related policies.You don’t need special qualifications to be a director of a corporation,and usually the shareholders elect and also remove directors. However,a corporation’s certificate of incorporation or its bylaws mayspecify that one director must be a shareholder and one must be a stateresident.Generally, directors serve for a set number of years and must thensit for reelection by the shareholders. Often, corporate bylaws call forstaggered elections so that all of a corporation’s directors are not electedat the same time. Directors meet regularly, at a time and place of theirchoosing.Directors are not entitled to notice of regular meetings. However,they must be properly notified of any special meetings. If some of thedirectors hold a special meeting without notifying other directors, allactions taken at that meeting are invalid. The board of directors of a corporationis subject to the duty of due care and the duty of loyalty to thecorporation.OfficersCorporate officers are appointed by and can be removed by thecorporation’s directors. Officers include a president, vice-president(s),secretary, treasurer, assistant officers, and other agents. Officers’ jobsare to implement the policies of the directors by carrying out day-to-day626 Unit 6: Starting a Business