When setting up a corporation, you must make sure you have the right officers in place. If you founded a new company, there might have been a time when you did everything on your own. Now, as the company grows, you need to put people around you to take some of the responsibilities off your shoulders. Depending on the type of company you have, different officer roles are necessary.
If you want to list your company on a public stock exchange, such as the NASDAQ, there are several specific roles you need to have. Typically, the board of directors is responsible for voting officers into certain roles. The most important role is the Chief Executive Officer or president. This position is typically voted on by the board of directors. Then, either the CEO or the board will be responsible for selecting other officers.
Your company should have one or more vice presidents. A good rule of thumb is that you should have one vice president for every department. For example, you may want to have a VP of sales, a VP of research and development, and a VP of operations. You should also make sure that your company has a treasurer or CFO. Finally, the board of directors may select a secretary, who is responsible for handling administrative tasks in addition to taking minutes during board meetings.
If your company is particularly large, there might be other officer positions that you want to have as well. These might include a chief operating officer, or COO, a chief technology officer, or CTO, and a chief marketing officer, or CMO. You should make sure that the powers, obligations, and duties of each officer are detailed in your company’s bylaws. Remember that officers also a fiduciary duty to the company as part of the position they hold.
If you want your company to be traded on the OTC markets, it is still important to have officers. But, you probably will not have as many officers as a company that trades on the NASDAQ Stock Exchange. You will still have to have a board of directors, and that board of directors will be responsible for nominating a CEO. You may also have a CFO and secretary, but, you could also have one person fulfill all of these roles. For example, the same person might be the CEO and CFO if your company is particularly small. The officers you have may depend on the tier your company lists on the OTC markets.
If your company is private or crowdfunded, you can tailor the roles to meet your needs. If you are the head of your company, you might be in charge of everything from marketing to financing and day-to-day operations. But, it is helpful to have an outside perspective. For example, you might want to rely on an outside advisory board that handles a lot of the roles of the CEO. You might even want to outsource your CFO position to someone with experience in the field. At the very least, you should have someone to bounce ideas off of. Then, as your company grows, you might need to hire an internal executive to handle certain tasks.
These officer roles are not set. For example, if you decide to move from the OTC Markets to the NASDAQ, you may want to expand some of your officer positions at that time. You may also want to change the number of seats on your Board of Directors if you believe it is valuable to have additional input from someone else. If you want to learn more about corporate arrangements and managing your cap table, reach out to Colonial today.