You might hear the terms “shareholders and board of directors’ in films and on television but you may not know what these roles actually mean for a company. Both are distinct roles that have important distinctions that companies must understand in order to function optimally.

Shareholders collectively own companies and elect a board to oversee their business. They also elect directors who oversee their investment interests. The board is legally obligation to oversee the shareholders and ensure that companies thrive. Sometimes, directors own shares in the company. However this is not the norm.

The board of directors is accountable for creating guidelines for the overall management and oversight of the company. They also meet regularly to discuss issues and solve them. It is the primary responsibility of the board be composed of a diverse group of individuals who are skilled, independent and well-qualified to oversee the business operations of the business.

Directors are responsible for making decisions that will benefit the company in the long run, hiring managers and corporate officials who manage the day-today operations, as well as conveying the company’s corporate culture to employees. They are also responsible to ensure the financial health of the company by ensuring that its finances are sound and there aren’t any instances fraud.

While shareholders aren’t in a position to directly influence or amend a decision made by the board, they can vote in support or make objections to the decisions taken. Directors can also be removed from their positions in the company if they do not violate their Shareholder Agreement and corporate bylaws.