A corporation has a separate legal identity, and the assets of the business belong to the corporation. The corporation can have bank accounts and can own any other type of assets under its own name. Each of the stockholders owns a share of the corporation, and in effect a portion of the corporation’s assets, based on the number of shares of stock he or she has purchased. But the shareholders do not have direct ownership of any of the corporation’s assets. The money and other property that they contribute to the corporation in exchange for shares of stock become the property of the corporation and no longer belong to the individual shareholders.
The shareholders have ultimate control over the corporation, and they exercise this control by electing a board of directors. The board is normally elected by a simple majority of the outstanding shares, so the shareholders who hold a majority of the stock can effectively elect the members of the board. The terms of the directors should be defined in the corporation’s by-laws, and shareholders can normally elect themselves to be on the board, if they wish to do so.
There are some major decisions that require the direct approval of the shareholders, such as amendments to the articles of incorporation, or the dissolution of the corporation. In some states, these decisions may require more than a simple majority vote to pass.
The board of directors is responsible for making most other major decisions. Normally there must be a meeting of the board at least once a year, and each director normally has one vote, with a simple majority needed to approve a decision. The board of directors elects the corporate officers, including the president, vice-president, secretary, and treasurer. Depending on the state, it may be possible for one person to hold more than one of these officer positions.
The corporate officers are responsible for the day-to-day operations of the business, and for making decisions on normal matters affecting the corporation. The officers can be employees of the corporation, and shareholders can be elected as officers.