How to Change Officers in a Corporation
To change corporate officers, review your company’s certificate of incorporation and bylaws for the rules and processes for removing and replacing an officer. Then, obtain written consent from the board of directors to proceed with the officer change. If naming a new officer, include this in the consent. Review any agreements with the departing officer, such as employment or equity agreements, that may require certain steps at termination. Notify the departing officer as required. Appoint any new officers according to the processes outlined in your company’s governing documents. When changing officers, adhere to all state corporation laws and filing requirements, which often entail submitting updated information to the secretary of state. The officers are responsible for managing company affairs, while directors oversee governance. Both directors and officers shape key decisions for the company.
Steps To Changing A Corporate Officer
Step 1: Review Certificate of Incorporation and bylaws for rules and processes for removing and/or replacing an officer.
Step 2: Obtain written consent from the Board of Directors to proceed with the change.
Step 3: Review any required steps or other actions that must be taken at termination under agreements with the officer (such as an employment agreement) or grants of equity, if any, which can result in a number of scenarios depending on the language used in the grant or in the equity policies.
Step 4: Notify the terminated officer as required by the bylaws or any other agreement and terminate any agreements and arrangements their removal requires.
Officer Change
The officers of a corporation are responsible for the day-to-day operation of the corporation. Officers are appointed by the directors and, together with the directors, form the management of the corporation. Officers can fill any position in the corporation that directors want them to fill (president, secretary, or any other position). Any individual can be an officer of your corporation. Officers can be shareholders or directors of the corporation, or both, but they do not have to be. One person could act as a director, officer, and shareholder simultaneously.
Who Chooses the Officers of a Corporation
Officers are appointed by the board of directors to run the day-to-day operations of the corporation. Commonly, a corporation will have at least three officers: (1) a president, (2) a treasurer or chief financial officer, and (3) a secretary. Officers do not have to be shareholders or directors, but they can be.
One of the benefits of incorporating a company is that the corporate structure provides personal liability protection to the corporation’s officers, directors, and shareholders. A corporation is a separate legal entity from its stakeholders. Therefore, officers are generally protected from personal liability related to performing corporate duties or from having an ownership interest in the business.
The board of directors manages the corporation and makes business decisions. The board chooses the officers (President, Vice President, Secretary, and Treasurer) who are responsible for running day-to-day operations.
The owners of the corporation are the shareholders, who also choose the directors. On behalf of the shareholders, directors participate in fundamental corporate decisions. The size of the board is in the company’s bylaws. A typical board has three to seven members.