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Corporations:Creation and Authority Structure

Brian Krogol
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So the creation of a corporation is not some very magical event. It's pretty standard, There's gonna be some paperwork to fill out. So, what we have is we're gonna have the incorporate Urz, which are basically the founders of the company. They're gonna pay some fees, they're gonna sign a charter, they're gonna file some paperwork with the state. So notice that there's gonna be a state of incorporation. So even though the corporation might do business nationwide, or worldwide, there's a specific state where they follow the laws of that state of the corporation. And you see a lot of times, the state of Delaware is one of the main uh, states, that has a lot of corporations have their their headquarters in that state, because they have some of the laxness laws for corporations, so it ends up being the state of incorporation. Okay, so, pretty simple stuff, fill out some paperwork, signed some documents, and then we're going to agree on a set of bylaws. Okay, They're called bylaws. And this is basically the constitution, the rules of the corporation. Whenever there's any sort of issue, we can go to the bylaws and see what the bylaws say for the corporation. For the most part, these are gonna be standard across different corporations. Okay, so let's look at the authority within a corporation right here. So at the top notice that it's the stockholders, the stockholders are the owners, right? They are the owners of the corporation. And what they're going to do is elect the board of directors. Okay, this board of directors, they are the head decision making, um, body of the corporation. It's usually somewhere between 7 to 9 uh people on the board and these are gonna be, you know, executives and people who know the industry and people like the Ceo that might be involved in the day to day operations of the building of the corporation. Excuse me. So the board of directors is gonna elect that chairperson of the board, which will be the Ceo right there and the Ceo and here, the C. O. Chief operating officer. So the chief executive officer, he's kind of like the head of management, right? The Ceo you hear this all the time and then chief operating officer. Well, depending on the size of the corporation, you might have a chief operating officer who then leads a lot a lot of the other managers who lead controllers. And you see it's a kind of a heirarchy throughout the corporation. Here we've got vice presidents after the chief operating officers, the secretaries, the CFO here and then accounting officer and the treasurer. Right? And they're going to have different departments under them as well. So notice at the top here, we do have the owners, the stockholders who are at the top of this, this food chain by electing the board of directors. Okay, by controlling who's on the board of directors, you can control what else is happy in the management of the corporation. Cool. You don't have to know so much about this chart. It's kind of just to show the flow of authority within a corporation. Cool. On the next page, we're going to continue talking about some of some more details about the stockholders themselves. So let's go into that in the next video.
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