Shareholders and the board of directors are two crucial elements in any company structure. Despite having different roles, they share the same goal of ensuring the company’s success and sustainable in the long run. Understanding these roles and their interactions is crucial to ensuring good corporate governance.

The board of directors is a set of people who are chosen by shareholders to supervise the company. They typically meet on a regular basis to set up policies for the overall management of the company and oversight. Additionally, they take care of the short-term decisions like hiring or firing employees, signing an agreement with a service provider, signing strategic partnerships and much more. The main function of the board is to protect the shareholders’ investments by ensuring that the company is operating smoothly and efficiently.

There aren’t any legal requirements that the directors be shareholders (in fact, initial directors could be listed in the Certificate or Articles of Incorporation or be selected by the incorporator) However, they must to hold a significant stake in the company. They can be individuals or corporations. The board could have any number of members however, many think that a maximum of nine members is the who are shareholders and stakeholders best. The board’s power comes from its bylaws, and the voting rights associated with shares.

Anyone can become a shareholder of any publicly traded company by purchasing shares. In private companies, where there are shareholder agreements or bylaws in place and the shareholders have greater control.