Board of Directors

The original Directors are designated in the Articles of Incorporation which is the document filed with the state to legally form the entity. Directors oversee the Officers of the company and assure that it operates according to law and corporate procedures. Directors have a fiduciary duty to the corporation to act in the corporation's best interest, not to their own best interest, among other legal duties. These duties are to protect the shareholders' investments in the corporation. Investors often want at least one representative on the Board of Directors since the Board formally controls the decisions of the company. However, sometimes investors avoid having any directors and arrange other contractual alternatives in order to avoid the fiduciary duty requirements to act for the benefit of the corporation rather than themselves. The Board of Directors appoints and may fire the Officers of the corporation who are responsible for the day to day operations of the company.

Shareholders

Shareholders are persons who have been granted stock by the corporation in exchange for money paid or services performed for the corporation. The shareholders meet annually, at the corporation's annual meeting, to elect the Board of Directors. Shareholders are not financially liable for the debts of the corporation and are not legally liable for any wrongdoing of the corporation. Investors will be granted shares in exchange for their investment. Typically, they will want "preferred shares" which mean that if there are minimal dividends or other negative financial events, they will have priority in getting their money over the "common stock" shareholders.

Officers

Officers typically include at least a Chief Executive Officer and/or President, Secretary and Treasurer/Chief Financial Officer. Officers do not have the same heightened level of fiduciary duties to the corporation that the Board of Directors has.