A board of directors (B of D) is an elected group of individuals that represent shareholders. The board is a governing body that typically meets at regular intervals to set corporate management and oversight policies.
The board may consist of shareholders or non-shareholders. Directors can own stocks, but if the stock ownership breaches a duty owed by the director to the corporation, it may be unlawful.
Majority shareholders have the right to vote for and elect members of a company’s board of directors, which means majority shareholders have a direct say in how the company is run.
The shareholders can vote to remove directors from the board before their terms expire, with or without cause, unless the corporation has a staggered board. The shareholders can then vote to replace the directors they removed.
Shareholders and directors have two completely different roles in a company. The shareholders (also called members) own the company by owning its shares and the directors manage it. Unless the articles say so (and most do not) a director does not need to be a shareholder and a shareholder has no right to be a director.
Shareholders and directors are two very distinct roles within a limited company. In simple terms, shareholders own the business, and directors run it. … There is no requirement for directors to also be shareholders, and shareholders do not automatically have the right to be directors.
The owners of a corporation are its stockholders, and the owners, at least in theory, can do almost anything they want, including firing members of an incompetent board of directors. There are many obstacles, but it can be – and has been – done.
At a general meeting, the shareholders can also pass a resolution telling the directors how they must act when it comes to a particular matter. If this is done, the directors must then take the action that the shareholders have decided upon.
Approving the company’s final dividend. Appointing or re-appointing the company’s auditors. Electing or re-electing the company’s directors. Approving amendments to the company’s articles of association.
Stockholders can have considerable influence in a business because they own it. A shareholder who owns a majority stake clearly controls the company, but even small shareholders can wield influence, individually or collectively, through their shareholder rights.