Let's talk about the important people involved in running a corporation: shareholders, directors, and officers.
Shareholders are like the owners of a corporation. They have certain rights, such as voting on big decisions, receiving a portion of the profits (through dividends), and electing directors.
Directors are responsible for managing the corporation and making important choices, like setting the company's strategy and appointing officers [1].
Officers are in charge of day-to-day operations and carrying out the directors' decisions. Together, these groups work to make sure the corporation is successful and acts in the best interests of its owners.
In this blog post, we will discuss the duties and responsibilities of corporate officers.
Is it Necessary to Appoint Officers?
So, why do we need officers? The role of officers in day-to-day management varies depending on their position. These include positions like president, chief executive officer (CEO), chief operating officer (COO), chief financial officer (CFO), secretary, and others appointed by the board of directors.
In addition to the applicable corporate laws, the Civil Code of Quebec (the “C.C.Q.”) applies to companies incorporated under Quebec's Business Corporations Act (the “QBCA”) and those under the Canada Business Corporations Act (the “CBCA”) that have an establishment in Quebec. Section 119 of the QBCA states that directors of Quebec corporations are subject to the obligations under the C.C.Q.
Under s 321 of the C.C.Q., the directors are considered mandataries of the corporation. Despite being mandataries, they do not have the power to represent and bind the business with third parties. This power is conferred upon the officers, who are granted the power to represent and bind the company [2].
Under the CBCA, the officers, in exercising their powers and discharging their duties, must act honestly and in good faith with a view to the best interests of the corporation; and exercise the care, diligence, and skill that a reasonably prudent person would exercise in comparable circumstances [3].
The officers of QBCA companies have the same obligations of prudence, diligence, honesty, and loyalty [4] as the directors [5]. This includes the obligation for officers to disclose the nature and value of any interest they have in a contract or transaction to which their corporation is a party [6].
What is The Role and Responsibility of Officers?
The officers of a corporation are responsible for overseeing the day-to-day management of the company. Different people with specific expertise may be appointed as officers to handle a specific set of responsibilities (for example, as the CEO or CFO).
Generally, the president is responsible for overseeing the operations and implementing the strategic vision of the board. The duties and responsibilities of the president may vary depending on the size and nature of the corporation. However, among these include the responsibility of representing the corporation across various transactions with third parties.
The president is also the public face of the corporation and represents the company vis-à-vis external stakeholders, such as investors, customers, and regulators. They may attend industry events, conferences, and meetings with other companies to promote the corporation's interests.
Furthermore, the president oversees the day-to-day operations of the corporation, ensuring that all activities are aligned with the corporation's goals and objectives. Their responsibility includes ensuring that the corporation has adequate resources to meet its obligations and developing and implementing effective management processes.
In addition to these responsibilities, the president may also have other duties, depending on the needs of the corporation. For example, they may oversee marketing and sales efforts, manage relationships with suppliers and vendors, or develop new business opportunities.
Overall, the president plays a critical role in the success of the corporation. They must be skilled in strategic planning, financial management, leadership, and communication. The president must work closely with the board of directors and other executives to ensure that the corporation is well-positioned to achieve its goals.
The secretary of a corporation plays an important role in ensuring that the corporation complies with legal and regulatory requirements and maintains accurate records of corporate activities. Among other things, the secretary may be responsible for board meeting management, including preparing agendas, notifying board members of meetings, and taking minutes. They must ensure that all decisions and actions taken by the board are recorded accurately and that any required follow-up actions are taken.
Conclusion
In conclusion, officers play a critical role in managing the affairs of a private corporation. By fulfilling their duties and responsibilities, officers can help ensure the success and longevity of the corporation. Directors need to ensure that officers are fulfilling their obligations under Canadian law and taking their responsibilities seriously. By doing so, directors can help protect the interests of the corporation and its shareholders.
This blog post is not legal advice and is for general informational purposes only. Always speak with a lawyer before acting on any of the information contained herein.
[1] s 112 QBCA and s 102 of the CBCA
[2] s 312 CCQ and s 116(2) QBCA).
[3] s 122 CBCA
[4] s 2138 CCQ
[5] s 322 CCQ
[6] s 122 QBCA and s 120 CBCA