CORPORATE STRUCTURE AND LAW

CORPORATE STRUCTURE AND LAW

• INTRODUCTION

When it comes to corporate structures in law, understanding the different components that make up a company organization is essential but we must first get accustomed to the meaning of “corporation” and “corporate structure”

  A corporation is an artificial legal person, an independent entity with rights recognized by the law for its functioning. 

   Corporate structure refers to the way an organization is sectioned to focus and specialize on goals and responsibilities. This structure governs the affairs of the company. Additionally, corporate structures can vary,including sole proprietorships,partnerships, limited liability companies(LLCs), and corporations. Under corporate law there are various legal requirements that companies must adhere to such as holding annual meetings, keeping accurate records, formulating policies to ensure workflow productivity and alignment with the company's goals. Understanding corporate structure under corporate law is crucial for businesses to operate legally and efficiently to ensure transparency and compliance with the law.

• THE ROLES IN A CORPORATION

1. Shareholders

 Shareholders are the owners of the company .They invest capital in exchange for shares of stocks,representing ownership in the company.They have the right to vote on important matters, such as electing the board of directors ,mergers and other significant corporate actions. They also receive dividends which are a portion of the companies profits distributed to shareholders.

 2. Board of Directors

 The board of directors is elected by the shareholders and is responsible for overseeing the company's management. Directors have a fiduciary duty to act in the best interests of the company and its shareholders. The board makes key decisions such as corporate policies, approving major transactions and hiring and firing top executives. The board typically includes inside directors(company directors) and outside directors (independent members).

 3. Corporate Officers

  While the board is responsible for the overall direction of the company,officers are appointed by the board of directors and are responsible for the day-to-day operations of the company. Key officers include:

-President or Chief Executive Officer (CEO):Overseas the overall operations and makes major corporate decisions

-Treasurer or Chief Financial Officer(CFO): Manages the company's finances, including financial planning,risk management and financial reporting.

-Vice President or Chief Operating Officer (COO): Overseas the company's daily operations and ensures efficient business practices. 

• IMPORTANCE OF CORPORATE STRUCTURE

1. Adhering to corporate laws ensure that the company operates within a legal framework, avoiding potential fines,penalties, or legal actions. It helps in maintaining the company's reputation and credibility.
2. Clear corporate structure delineates the roles and responsibilities of shareholders,directors and officers, safeguarding their interest. It establishes accountability and transparency within the organization.
3. Proper corporate governance and legal compliance help in mitigating risks associated with business operations. By following the regulations, companies can identify and address potential issues proactively and provide solutions swiftly.
4. Investors look for well structured companies with qualified and experienced personnel with good ethical behavior ,to be assured and certain of proper execution of the required service. A good corporate structure enhances investors' confidence and promotes patronage. 

• CONCLUSION 

 So, understanding corporate structure and corporate law is key for business to stay on the right side of the law,protect stakeholders,manage risks and build trust with stakeholders.Good corporate governance ensures accountability ,fairness,and transparency in a companies relationship with its stakeholders.Knowing the ins and outs of corporate law is fundamental for a successful and sustainable business journey.

REFERENCES

Central Bank of Nigeria, “Code of Corporate Governance for Banks in Nigeria post Consolidation”, Retrieved 29th August 2022 from: https://www.cenbank.org/out/publications/bsd2006/corpgov-postconso.PDF

CFI Team, “Corporate Structure”, https://corporatefinanceinstitute.com/resources/knowledge/finance/corporate-structure/ accessed 1 September 2022

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