11.2.3 Corporate Structure

The Corporate Structure

A typical corporate structure at the executive level is illustrated below. The organizational chart outlines different key roles and their hierarchal positioning within the corporate framework.

Simplified Organizational Chart of a Hypothetical Corporation

    graph TB
	  A(Shareholders)
	  B(Board of Directors)
	  C(Chairman of the Board)
	  D(President)
	  E(Executive Vice President)
	  F(Vice-President of Finance)
	  G[Vice-President of Marketing]
	  H(Vice-President of General Counsel)
	  I(Secretary and Vice-President of Human Resources)
	  J(Vice-President of Research)
	  K(Vice-President of Public Affairs)
	
	  A --> B
	  B --> C
	  C --> D
	  D --> E
	  E --> F
	  E --> G
	  E --> H
	  H --> I
	  I --> J
	  I --> K

Directors

The directors hold significant responsibility within a corporation. Here are some of their major roles:

• Legal Requirements: Directors must be of the age of majority, of sound mind, and not an undischarged bankrupt.
• Policy Making: They set company policies by passing resolutions.
• Supervision: Normally appoint and supervise officers and have authority over business decisions like banking, budget approvals, and expansion plans.
• Decisions on Shares and Profits: Responsible for decisions to issue shares and declare dividends. They can also decide on other profit dispositions.
• Liability: Held personally liable for any illegal acts of the corporation done with their knowledge and consent. Also responsible for wages, declared dividends, and government remittances.
• Fiduciary Duty: Must act honestly, in good faith, and in the best interests of the corporation.

Chairman of the Board

The Chairman of the Board also carries important duties:

• Election: Elected by the board of directors.
• Responsibilities: May hold duties of the president or other officers and may act as the CEO.
• Influence: Presides over board meetings and plays a significant role in managing corporate affairs.
• Dual Role: The job may be combined with that of the president.

President

The role of the president encompasses multiple responsibilities:

• Appointment: Appointed by, and responsible to, the board of directors.
• Delegation: Exercises authority through officers and heads of departments.
• Acting Chairman: May serve as chairman in their absence if not already combined with the chairman role.

Vice-Presidents

Vice-presidents also play vital roles in corporate structure:

• Appointment and Accountability: Appointed by, and responsible to, the president.
• Operational Leadership: Lead specific operational areas like sales or finance.

Officers

Officers ensure the smooth day-to-day running of a corporation’s business:

• Appointment: Appointed by the board of directors.
• Responsibilities: Handles daily operations.

Key Takeaways

• Understanding the hierarchical structure of a corporation helps detail the executive functions and responsibilities.
• Different roles from Directors to Officers, each have specific legal and operational duties that impact overall corporate governance and daily operations.
• This breakdown is essential for those studying for the Canadian Securities Course.

FAQs

What is the main responsibility of a corporate director?

Directors are mainly responsible for setting company policies, appointing and supervising officers, deciding on issuing shares and declaring dividends, and ensuring the best interests of the corporation are met.

Can one individual be both Chairman and President?

Yes, the roles of Chairman and President can be combined. In the structured hierarchy, it’s feasible for one person to fulfill both roles.

What are the legal requirements to be a corporate director?

A corporate directory must be of the age of majority, of a sound mind, and not an undischarged bankrupt.

Feel free to use these insights as you prepare for the Canadian Securities Course. Understanding the intricacies of corporate structure can give you a significant advantage.