The Organizational Structure of a Corporation

The organizational structure of a corporation can vary, but typically it consists of the board of directors, officers, employees, and shareholders or owners. Within the organizational structure of a corporation, one individual can simultaneously be the sole shareholder, the director, the officer, and the employee. Read here for more about the organizational structure of a corporation.

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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Corporations can have many structures, but the most standard structure consists of the (1) board of directors, (2) officers, (3) employees, and (4) shareholders or owners. There is no limit your corporation can have as many as are desirable or expedient to do business. On the other end of the spectrum, one individual can simultaneously be the sole shareholder, the director, the officer, and the employee. You can have as many or as few people necessary to conduct business in a corporation.

What Are the Four Types of Organizational Structures?

The standard structure type was mentioned above. Based on business strategy, each company may take a different approach to corporate structure. There are a few different types used by businesses:

  • Divisional Structure
  • Flat Structure
  • Functional Structure
  • Matrix Structure

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What Are the Board of Directors’ and Officers’ Roles in a Corporation?

The primary responsibility of the board of directors is to protect the shareholders’ investment. The Board–which may be one person (typically in one shareholder corporations) or as many as the bylaws provide for– are elected by the Shareholders for this reason. The Board of Directors reports on the business’ success and progress to the Shareholders, normally via an annual or quarterly report.

While not involved in the daily operations of the business, they set its mission and structure. The Board of Directors is responsible for drafting and amending the company by-laws and appointing committees as necessary. They, along with officers, are protected from the company’s business losses.

The Board appoints the Officers. The Officers are the President or CEO (chief executive officer), one or more Vice-Presidents, the Treasurer, and the Secretary. In larger enterprises, there may be hundreds of Officers to handle daily business activity. These people report to the Board of Directors. They are responsible for normal everyday business operations. Their main responsibility is to act in the best interests of the Corporation. This may or may not always align with the Board of Directors’ wishes.

What is the employee’s role in a corporation?

Employees make the business run. They carry out the various tasks associated with the company’s mission. Employees report to a management team which lays out expectations and individual roles.

Employees may have stock options or even enjoy profit sharing. They are not responsible for self-employment taxes, and their personal assets are not tied up in the company generally speaking. Any business debt does not affect their personal finances in a direct way. Employees, like Corporate Officers and Board Officers, are key parts of an efficient decision-making process and company.

What roles do shareholders or owners play in a corporation?

The shareholders own the corporation, which means they often get a vote in certain decisions. Of course, if the company has sold 100,000 shares and you own 10 shares, it doesn’t give you much decision-making power. On the other hand, if the company is not publicly traded and the ownership is 100 percent in the hands of one individual, that individual would have complete control in conjunction with Boards of Directors. Many Owners, Founders, and everyday Shareholders take a limited role in daily tasks.

How does all of this work for the average Shareholder? Shareholder groups routinely vote on the election and removal of directors, amending by-laws, major corporate changes (mergers, sales, dissolution), disposition of corporate assets, and amendment of the Articles of Incorporation. The level of Shareholder influence on the Board of Directors depends partly on how many shares you have. It is one of many things to consider when forming a new corporation. Once you’ve moved forward with a set business structure, it may be hard to change later on.

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