How to Name C Corp Officers

by John Cromwell

A C corporation is an organization legally distinct from its owners, otherwise known as shareholders. This legal separation generally protects the shareholders from being personally liable for the business’s liabilities. Oftentimes it also requires that the business’s day-to-day activities be run by corporate officers. The corporate officers are often the face of the business to its employees, customers and suppliers, so choosing the correct people for the job is important. In addition to finding the right fit, it is important to ensure that you comply with all of the required procedures for appointing officers.

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Corporate Bylaws

Review the corporate bylaws. The corporate bylaws are the rules about how the business is to be managed that were established by the shareholders when the business began. Included in the bylaws are the procedures for board of director meetings and the number of corporate officers authorized for the business. Familiarize yourself with the procedures. Take note of any requirements or qualifications the bylaws may impose on the potential vacancy you are trying to fill.

Positions to Be Filled

Assess the needs that the corporate officers must address. There are numerous types of corporate officers and each has different responsibilities. A chief executive officer, for example, is responsible for overseeing an entire corporation, while a chief financial officer is focused on the financial aspects of the firm. Consider your corporation’s goals. If your business is trying to enter another market or do an initial public offering, you want more than someone who can just do the tasks outlined in the bylaws. You will want to consider getting a person who has experience in achieving the corporation’s specific goals.

Employment Law

Review federal laws regarding hiring discrimination. Employers are generally prohibited from hiring a person based on race, color, religion, sex, age, ethnic/national origin, disability or veteran status. To ensure that your corporation does not participate in discriminatory hiring practices, if you must ask about any of the above characteristics for record purposes, do so on a form separate from the candidate’s application. Never indicate a preference for a characteristic in one of the above classes in any recruitment material, and recruit from a diversity of sources.

Interviewing Candidates

Interview potential candidates. Ensure that you have plenty of time to interview the candidates so that you are not rushed. Plan on having multiple interviews with your top candidates. The interviews should be with a variety of interviewers ranging from directors, large shareholders, the outgoing officer, current corporate officers and maybe even employees. In addition to ensuring that they can do the job, ask questions to confirm that the candidate will fit into corporate culture and that she has a long-term vision and plan for the corporation.

Board of Directors

Once you have a recommendation for the position, call a board of directors meeting using the process outlined in the corporate bylaws. The board of directors is responsible for making the formal decision regarding hiring corporate officers. Present the candidate and her qualifications to the board in a complete and impartial manner, and then state your recommendation. Have a director call for a vote. If the candidate receives the votes necessary for approval as defined by the bylaws, extend an offer to the candidate. If she accepts, she is then hired to fill the corporate officer role.