4 ms·

I think you are misunderstanding the way corporations are organized. All corporations must have a board of directors, and the board of directors is the ultimate

by minimax 12y ago

I think you are misunderstanding the way corporations are organized. All corporations must have a board of directors, and the board of directors is the ultimate top level decision making entity within the corporation. The board is always in control. Shareholders have the ability to periodically vote on directors, but that is basically the extent of their power. Shareholders have no right to influence day to day operations of the corporation. So, if you are a founder and want to assure control of the board, you must maintain a majority of voting class shares, otherwise large investors could vote in their own directors who can do whatever they want (like replacing the founder as the CEO).

stepstep 12y ago
> All corporations must have a board of directors It this a legal requirement, or is it just by convention? Has anyone ever experimented with alternate company structures?
- minimax 12y ago
  I'm not a lawyer, but I did just read a book† written by a lawyer†† about this topic. I think it's possible that it can vary state to state, but in Delaware (a very popular place to form corporations) the law††† says: The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors, except as may be otherwise provided in this chapter or in its certificate of incorporation. † http://www.amazon.com/The-Shareholder-Value-Myth-Shareholders/dp/1605098132 http://www.amazon.com/The-Shareholder-Value-Myth-Shareholder... †† http://www.lawschool.cornell.edu/faculty/bio_lynn_stout.cfm http://www.lawschool.cornell.edu/faculty/bio_lynn_stout.cfm ††† http://delcode.delaware.gov/title8/c001/sc04/index.shtml http://delcode.delaware.gov/title8/c001/sc04/index.shtml
mathattack 12y ago
The board is always in control. The control may be overstated. Their main method to utilize the control is hiring and firing the CEO. This puts them in a tough spot, because firing the CEO can damage a company.
bjornsing 12y ago
> The board is always in control. In control of what exactly? In early stage companies I'd say nobody's really "in control" of any meaningful outcomes: building something people want, making sales. The last thing you need is some "experienced" big company guy who thinks he can control things given enough board seats... > if you are a founder and want to assure control of the board, you must maintain a majority of voting class shares Typically doesn't help. Stuff like this is usually controlled through a shareholder's agreements (or in some jurisdictions possibly a company bylaw).

by minimax 12y ago

stepstep 12y ago

> All corporations must have a board of directors It this a legal requirement, or is it just by convention? Has anyone ever experimented with alternate company structures?

minimax 12y ago
I'm not a lawyer, but I did just read a book† written by a lawyer†† about this topic. I think it's possible that it can vary state to state, but in Delaware (a very popular place to form corporations) the law††† says: The business and affairs of every corporation organized under this chapter shall be managed by or under the direction of a board of directors, except as may be otherwise provided in this chapter or in its certificate of incorporation. † http://www.amazon.com/The-Shareholder-Value-Myth-Shareholders/dp/1605098132 http://www.amazon.com/The-Shareholder-Value-Myth-Shareholder... †† http://www.lawschool.cornell.edu/faculty/bio_lynn_stout.cfm http://www.lawschool.cornell.edu/faculty/bio_lynn_stout.cfm ††† http://delcode.delaware.gov/title8/c001/sc04/index.shtml http://delcode.delaware.gov/title8/c001/sc04/index.shtml

mathattack 12y ago

The board is always in control. The control may be overstated. Their main method to utilize the control is hiring and firing the CEO. This puts them in a tough spot, because firing the CEO can damage a company.

bjornsing 12y ago

> The board is always in control. In control of what exactly? In early stage companies I'd say nobody's really "in control" of any meaningful outcomes: building something people want, making sales. The last thing you need is some "experienced" big company guy who thinks he can control things given enough board seats... > if you are a founder and want to assure control of the board, you must maintain a majority of voting class shares Typically doesn't help. Stuff like this is usually controlled through a shareholder's agreements (or in some jurisdictions possibly a company bylaw).