Tuesday, February 16, 2010

(109)-THE BOARD OF DIRECTORS IN COMPANIES

The Board of Directors In companies

A company can have a large number of shareholders, or only a few. No matter how many there are, they delegate authority for the day to day management of the company to its directors, who are directly responsible to the shareholders for what they do. In some small companies, the directors of the company and its shareholders are the same people.

There must also be a company secretary. Company policy is decided at regular meeting of the board of directors.

The salary of a sole trader or a partner is not a charge in the profit and loss account, but is an appropriation of profit. However, the salary of a director is a profit and loss account expense. This is because the directors are considered to be employees of the company, even when a director is also a shareholder of the company.

It would be wrong to give the impression that all companies are large scale with many shareholders.

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