When it comes to the day to day work of a stock corporation in the US, neither the board nor the shareholders are typically involved – they don’t sign agreements, give orders, or do much of anything all. Instead, they appoint officers, who are responsible for the day to day operations of the corporation, and who typically operate with relatively little oversight outside of annual or semi-annual meetings.
Most jurisdictions require three officers: President, Secretary, Treasurer, although those officers may also hold additional titles such as CEO, CFO, or similar. Additional officers are not uncommon, particularly in larger companies, and may include Vice Presidents, Assistant Secretary, and an Assistant Treasurer. Other titles, such as CEO, CFO, and Manager are permitted, and can be used in conjunction with the above officer positions, but in most cases the company must still appoint all three legally required officer positions. Even where those specific positions are not mandated by law, it’s typically better to use those titles (in addition to other titles if desired), since many forms will ask for the signature of one or more of those officers.
In the typical closely held corporation, the president is the highest ranking official, vested with the broadest possible powers. The president is generally held to have implied actual authority, by virtue of his office, to engage in ordinary business transactions, such as hiring and firing non-officer level employees and entering into contracts in the normal course of business. The president does not usually have the authority to bind the corporation to contracts which are not in the ordinary course of business, such as contracts for the sale of real estate or the sale of all of the corporation’s assets. Where the president who is also responsible for the long-term strategic direction of a corporation (and may also be a board member), the title Chief Executive Officer was traditionally added. Of course, CEO sounds pretty cool, so that historical practice has been replaced by a plethora of random CxO titles ranging from Chief Vision Officer and Chief Knowledge Officer to Chief Heart Officer.
The Secretary is responsible for maintaining the corporate records, and typically handles legal matters as well. The authorities and duties of the secretary should be clearly defined in the bylaws. As a result, the secretary is often an attorney, whether general counsel or outside counsel. In firms with an in-house legal team, outside counsel may act as assistant secretary, and in some cases third-party service providers provide secretarial services for a fee. The Secretary has authority to certify the records of the corporation, including resolutions of the board of directors. That’s often important for US subsidiaries of German companies, since a secretary’s certification can be used in place of documents which don’t otherwise exist under the US legal system. The appointment or election of a secretary is a statutory requirement in many states.
The treasurer has usually the ultimate responsibility for the management of the corporate funds, and will be the primary interface between the corporation and its accountants, bookkeepers, and banks. The treasurer is responsible for overseeing the corporation’s funds, as well as the preparation of financial reports and budgets and the filing of tax returns. The treasurer may also be CFO.
Any officer can typically hold one or more officer positions. We typically don’t recommend that a single person hold all three positions, since the unavailability of that individual makes it very difficult to enter into contracts or perform other corporate actions.
Image courtesy of Wikimedia Commons, 1964, Unknown photographer