What is a Corporation?

A corporation is comprised of owners, called shareholders (or stockholders, if you prefer). Shareholders, either individuals or business entities, are sometimes also involved in the day-to-day affairs of the business, and sometimes they are simply investors. With most small corporations, shareholders also run the business. Every corporation has one or more “officers” and one or more “directors.” In small companies, these are usually the same people. Often there are one or a small number of founders of the company who are shareholders and who also serve as the company’s directors and officers. In larger corporations, this is often not the case.

All of the directors of the corporation comprise the “board of directors.” This may be just one person, or it may be many more, depending primarily on the size of the company. Some businesses are required to have some minimum number of directors by laws or regulations that govern their industry, such as banks and other financial institutions. The directors are appointed by the shareholders of the company, and the board then appoints the company’s officers. The board is the principal governing body of the corporation, and all significant corporate decisions must be made (or approved) by the board.

By law, Florida corporations must hold at least an annual meeting of the shareholders and of the board of directors. Depending on the company’s industry and type of business, the size of the company and other factors, the board may choose (or may be required by regulation) to meet more often. Typically, boards of larger companies will meet at least quarterly in regularly scheduled meetings. Also, whenever circumstances arise that require the board’s input, they will meet in a special meeting that may be called by one or more of the officers, shareholders, or directors.

The officers of the corporation are responsible for its day-to-day operations. Officers are given titles, including “president,” “vice president,” “secretary,” “treasurer” and various others such as “chief executive officer.” Officers serve subject to the authority and approval of the board of directors and the terms of their employment, including compensation, is determined by the board. In some cases, officers will enter into employment agreements with the company which will describe all of those terms.

There are two principal governing documents common to most corporations: the company’s bylaws and a shareholder agreement. The bylaws generally cover subjects including election of directors, how meetings of directors and shareholders are called and conducted, and the rights and duties of the company’s officers.

The shareholder agreement is an arrangement among the shareholders describing how the company should be operated and the shareholders’ rights and obligations. It also governs relationship between the shareholder, including stock ownership, voting and transfer rights and the privileges and protection of shareholders, among other things.

In addition to the articles of incorporation and certain other required documents, Widerman Malek, PL will prepare the bylaws of the corporation when it forms the business entity. We can also prepare a shareholder agreement if requested. This would be an additional cost item and is not part of the corporate formation package.