Duties Of Corporations Essay

805 WordsFeb 19, 20124 Pages
Duties of Corporate People A corporation is a legal entity which has its own identity different from those of its members. The defining legal rights and obligations of a corporation consist of the capacities to sue and to be sued, to have assets, to employ agents, to engage in contracts, and to make by-laws governing its internal affairs. A corporation has a legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses. One of the most important aspects of a corporation is limited liability. This means that shareholders have the ability to participate in the profits, dividends, and stock shares. Because of these responsibilities, directors of corporations, officers of corporations and shareholders of corporations all have an important part in operation of the corporation. Directors and Officers “Directors and officers are in positions of trust; they are entrusted with property belonging to the corporation and with power to act for the corporation.” (Mallor, 2010, p. 1056). Directors of corporations have the duty to maintain the company’s profit levels. They have a direct responsibility to the shareholders for profits, return on investments, and budgetary expenses. “Directors and officers are liable for losses to the corporation resulting from their lack of care or diligence.” (Mallor, 2010, p. 1056) Directors and officers differ in some ways. Both are required to act in the most professional manner and in the best interest of the corporation. The board of directors has the direct responsibility to the shareholders. The board of directors and directors make the decisions in the best interest of the company. Often shareholders are not able to make business decisions. Lack of experience is often the case so the managers are left to make the decisions which in

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