Can an Owner Be a Manager in a C Corporation?

By Jennifer Kiesewetter, J.D.

Can an Owner Be a Manager in a C Corporation?

By Jennifer Kiesewetter, J.D.

An owner can participate in the management of the corporation. However, those involved in the business must follow specific steps for this to happen. When a company incorporates as a C corp., the owners adopt a legal, formal structure, and must also identify how they will manage the operations.

Coworkers sitting in chairs arranged in a circle

Management of C Corporations

When an entity adopts a C corporation structure, it must follow a specific three-tiered structure for its management. First, shareholders, also referred to as stockholders, own the company through shares of issued stock. However, they don't make day-to-day decisions. Instead, they elect a board of directors who will run the business.

They participate in the overall management, as set out in the company's bylaws. Directors control high level corporate decisions and appoint officers and managers who run the daily operations.

A shareholder can be appointed as an officer or a manager. The requirements are typically outlined in the by-laws. Further, both must receive at least majority approval by the board. This document establishes specific duties for those participating in the business. Depending upon your state, you may have to file a copy with the secretary of state's office. Other items that this document addresses is:

  • Authority/duties of all directors, managers, and officers
  • Process for resignation
  • When and how company meetings shall be held
  • Voting decisions
  • How shares can be transferred

Management Oversight

Corporate managers oversee the daily operations of a C corporation. They are often c-suite executives, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operating officer (COO), to name a few. These individuals define and communicate the company's objectives, responsibilities, and expectations to all employees. Depending on the type of business, they oversee the entity's operation and administration.

They typically participate in strategic planning, managing the professional assets, analyzing customer experiences, and participating in meetings with banks or professional advisors. They report to the board of directors who should work hand in hand with their managers, achieving their shared vision and goals for the company.

Director Duties

The board of directors acts on behalf of the shareholders, providing the mission, visions, and oversight. The board has a fiduciary duty to them, meaning the directors must act in good faith and solely in the interest of the shareholders and the business, not for personal benefit. Thus, the directors must confirm that the company is meeting its targets and making money for them. Further, the directors oversee the actions of the offices and managers.

Most companies purchase insurance policies to protect them from legal actions, such as lawsuits. Otherwise, they could incur personal liability for any errors or omissions. However, liability insurance policies don't cover all possible actions or inactions. Companies should understand what's contained in their liability policy.

Further, the directors oversee the actions of the officers and managers. Most state laws require the board to attend an annual corporate meeting, where they appoint new people. When forming a new C corporation, company owners should check with their local state laws on business formation. Additionally, if you already have a C corp., it's a good idea to review your formation documents, your by-laws, and your management structure for any changes in the law or in your internal operations.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.