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  Managing a Company

Introduction to Managing a Company

A limited company may contain legal personality, but it is not a human being able of taking decisions and plans regarding to the business and exercising control over it. People must take on these management tasks. The very senior level of management of a company is the board of directors.

The shareholders elect directors (through law there must be at least one director for a private limited company and 2 for a public limited company) to handle the company on an everyday basis on behalf of those shareholders. The board might be the only level of management and contain all of the shareholders, in a small company. In larger companies, the board might contain ten or so directors out of several thousands of shareholders. Certainly, directors are not even needed to be shareholders. Under the board of directors of the typical large company could be various layers of management including thousands of people.

In current years, the issue of corporate governance has produced much debate. The term is employed to explain the ways according to which companies are directed and controlled. The issue of corporate governance is significant since with larger companies, those who own the company (i.e. the shareholders) are generally divorced from the everyday control of the business. The shareholders use the directors to handle the company for them. Given this position, it might seem reasonable to suppose that the best interests of shareholders will guide the decisions of directors. Though, in practice this does not all the time seem to be the case. The directors might be more regarded with pursuing their own interests, like rising their pay and 'perks' (like expensive motor cars, overseas visits and so on) and enhancing their job security and status. The result of it is a conflict can take place among the interests of shareholders and the interests of directors.

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