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Shareholders, directors, and officers in BC corporations - definitions of roles

A company is like a country.  The shareholders are like the voters.  They have the right to elect directors, but aren't involved in management.  The directors are like members of parliament.  They are in charge of the overall direction and management of the company, but aren't involved in its daily operations. The officers are like the bureaucracy. They are hired by the directors, and handle the day-to-day business.

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The shareholders are the real owners of the company. However, except for the election of directors, receiving financial statements, and attending at the annual general meeting, they do not normally have any involvement in the management of the company. In a small company, the shareholders, directors and officers may be the same people; however, the right to manage flows from the director or officer roles.

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Directors are in charge of the overall management of the company, and are usually elected by the shareholders of the company once per year. The incorporators of the company are its first directors. A company must have at least one director, but can have as many as the constitution allows. At least one director must be resident in B.C., and the majority must be resident in Canada.

A director has a "fiduciary duty" to act in the best interests of the company. This is a very serious responsibility, comparable to the duty a trustee owes a child expecting to benefit from a trust. If a director acts in his own best interests to the detriment of the company, he could be liable and must account for any benefit.

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Officers are appointed by directors. They manage the company day-to-day. A company must have a president and a secretary, but can have other officers such as vice-presidents. The president must also be a director.

Related links:

"Am I personally liable for the debts of the company?"

Directors' resolutions

choosing a name | kinds of shares | memorandum and articles | shareholders, directors, and officers | registered and records offices

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