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It might be useful to explain briefly the standard structure of …

Posted on March 27, 2015 by Shahid Bolsen

It might be useful to explain briefly the standard structure of corporations.

All significant decisions in a corporation are made by the Board of Directors (usually between 12 to 15 people). They select the management, determine business strategy; what, how, and where the company will operate, etc.

The Board of Directors is elected by the company shareholders, each shareholder has one vote per share owned. Essentially that means that the majority shareholder chooses the Board, and the Board is accountable to the shareholders.

Corporate profits are distributed among the shareholders in the form of dividends, according to the number of shares each shareholder owns.

Employees do the work and create the profit, but have no role in decisions about the work they do, nor any share in the profits they create.

So, you can see, corporations are purely totalitarian institutions. When we are talking about multinational corporations operating in a developing country, we can add an extra tier to this model, positioned somewhere between corporate management and the Board of Directors, but certainly below the shareholders, and this tier is the national government.

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