As your company grows, you’ll likely onboard a CEO, a CFO, maybe even a CIO. Below, we step through some of the names and roles of the key players in a company, and while your business may not employ all these people, it’s prudent to know how they effect day-to-day operations.
What is a Shareholder or a Member?
A shareholder is also referred to interchangeably as a member. Shareholders ‘own’ the company in that they provide money to the business in return for part ownership, and hope to generate a return on their investment. Depending on the class of shares the shareholder or member holds in the company, the shareholders may have the right to vote on matters concerning the management and direction of the company’s growth.
What is a Majority Shareholder?
A majority shareholder is a shareholder who owns more than 51% of the shares of a company. Often, the majority shareholder is the founder. By owning the majority share of the company, majority shareholders can influence the direction of the company and matters to be decided.
What is a Minority Shareholder?
A minority shareholder is a member who owns less than 50% of the shares of a company. Minority shareholders could be friends and family or even employees of your company. Minority shareholders have, expectedly, less power than the majority shareholders in deciding the direction of a company.
What is a Director?
Shareholders appoint a director who is in turn responsible for managing the company’s business affairs. The Corporations Act 2001 (Cth) prescribes their role and duties, as well as the company’s constitution and the shareholders agreement. When a person is acting as a director, they must act in the best interests of the company. This is even so where there may be a conflict between the director’s personal interests and those of the company. If there is more than one director, then the directors collectively make up the ‘Board of Directors’.
Critically, if you act as a director of a company but have not been formally appointed, you may be a shadow director and the above duties will apply.
What is a Chairperson?
The company’s board of directors chooses a chairperson to oversee and preside over board meetings. His or her job is to ensure that the meetings run efficiently and in an orderly fashion. Some companies may have decided that if there is a deadlock (i.e. the board cannot reach a decision on a particular matter), the chairperson will have the deciding vote.
What is a Company Secretary?
Not all types of companies need to have a company secretary. If your company does have a company secretary then some of the tasks they may be responsible for include:
- Administering the affairs of the company and the business of the board;
- Advising the board of directors on the best practice corporate governance requirements for the company;
- Familiarity with the director’s duties under the law;
- Attend to all board reporting; and
- Other register/document obligations.
What is a CEO?
The CEO or Chief Executive Officer is the highest ranking executive in a company. Although typically one of the company’s founders and a director, they don’t necessarily have to hold either of these positions. Their primary responsibilities include developing strategies, managing operations and communicating with the board. In some cases, the CEO is also the chairperson of the company.
What is a CFO?
A Chief Financial Officer is responsible for overseeing the financial activities of the company including financial planning, budgets, monitoring cash flow and looking at the company’s numbers. They assess the company’s financial position and offer advice to the board of directors on any changes they consider the company should make in order to strengthen its financial position. They are similar to a treasurer and are responsible for the accounting and finance departments.
If you have been asked to be a shareholder or director in a company and would like some advice on what the role requires, get in touch with one of our commercial lawyers on 1300 544 755.