How Is a Corporation Managed & Controlled by the Stockholders?

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Stockholders control and manage a corporation through its control of the company's board of directors.
Stockholders control and manage a corporation through its control of the company's board of directors. (Image: Comstock/Comstock/Getty Images)

While a corporation is managed and controlled directly by its board of directors through the hiring and control of the company’s executive officers, those directors have their positions due to the votes placed by the stockholders who own the corporation. By their choice in directors, stockholders indirectly control the path of the company. If the directors choose wisely in executive management, they maintain their positions. On the other hand, if stockholders disagree with the way the company is managed, they simply vote in a new slate of directors who then replace the executives running the company with those more suited to the chosen stockholder path.

Purchase voting stock in a corporation of your choice. The larger the stock purchase, the more control you will have over the workings of the corporation. Buy at least 3 percent of the company stock and hold onto for three years in order to have a direct say in company control.

Wait for the stockholder’s meeting where the shareholders will vote for a new board of directors. Use your 3 percent stake, if you have that much, to nominate a director for the board. Once nominated, your nominee will appear on the proxy ballot for that year to be voted on by shareholders.

Wait for the placement of the remaining nominees to the ballot. Speak to other major shareholders in the corporation to discuss your choice among the nominated board members and to advocate for your choice. To limit insider trading, those making large purchases of stock in a corporation must file the purchase with the SEC. You can check the SEC filings for the names of the purchasers as well as contact information in order to develop a list of major shareholders to canvass.

Cast your vote for the board of directors at the stockholder’s meeting. Those voted in will determine the direction of the company by appointing the officers who manage the corporation, including the company president, and other high ranking corporate executives.

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