How Many Directors and Officers Do I Need to Appoint?

Under the Ohio statute, a corporation is generally required to have at least as many directors as it has shareholders, up to three.  So if there are two shareholders, the corporation generally is required to have at least two directors.  But if the corporation has four or more shareholders, the corporation is only required to have three directors (it may have more). 

Once the shareholders have appointed the directors, the directors generally appoint the officers.  The normal offices include: President, Vice-President, Treasurer and Secretary.  There can be numerous vice-presidents, each in charge of a certain area such as marketing or finance or production.  There can also be assistant officers such as Assistant Treasurer or Assistant Secretary.   If for some reason the President is unable to fulfill his or her duties, a Vice-President generally has the authority to step in.  Similarly, if the Treasurer or Secretary cannot fulfill his or her duties, the Assistant Treasurer or Assistant Secretary can step in.

An officer can hold more than one position.  In a closely-held company, it is not uncommon to see one person act as President and Treasurer.  It is also not uncommon to see a person act as Vice-President and Secretary.  It is somewhat uncommon to see one person act as President and Secretary. 

Under the Ohio statute, no person can act as both President and Secretary unless authorized by the terms of a Close Corporation Agreement.  A Close Corporation Agreement can be used to change the number of directors required, to give one person the authority to hold every corporate office, and/or to otherwise create a governance structure that is contrary to the defaults set forth in the Ohio statute.  More about Close Corporation Agreements will be found in a future blog.

If I can help you incorporate, or put together a Close Corporation Agreement appropriate for your situation, please let me know.  Jsenney@pselaw.com or 937-223-1130.

If you like what you read, forward this to a friend.  Tell them to check it out by clicking on the SenneySays logo.   

AND ONE MORE THING.  A really good way to get your employees thinking like business owners is to give them an ownership “stake”.  You can do this by giving them a stock option or by giving them deferred compensation measured by increases in the value of the business.  Call or email me if you would like to talk about how employee compensation and incentive packages at Jsenney@pselaw.com or 937-223-1130.