Who Does What in a Corporation? A Plain English Guide to Shareholders, Directors, and Officers

When you incorporate a company, you are creating an entiry that is in practical and legal terms, a legal person. A company (also known as a corporation) can own property, sign contracts, hire people, and take on risk. But the company can only carry out its actions through humans or course. In Canadian corporate law (including the Nova Scotia “limited company” model, and the federal and most provincial business corporation statutes), those humans usually fall into three buckets: shareholders, directors, and officers. People mix these up all the time, especially in closely held startups and family businesses, where the same person may wear all three hats.

Here is the practical way to understand it.

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Garnet Brooks, Managing Lawyer

1) Shareholders: the owners, not the day-to-day managers

Shareholders own shares in the company. That ownership gives them economic rights (like receiving dividends if declared) and governance rights (mostly voting). Shareholders do not automatically have the authority to run the business or bind the company to contracts just because they are owners.

What shareholders typically do:

• Elect and remove directors.
• Vote on major structural changes, like certain amendments to the corporate documents, reorganizations, amalgamations, or a sale of “all or substantially all” of the company’s assets (the exact list depends on the statute and the company’s documents).
• Approve certain fundamental transactions where the law requires shareholder approval.
• Use shareholder rights to receive certain corporate information and attend meetings, subject to the rules for the corporation and the class of shares.

What shareholders typically do not do:

• Sign contracts for the company just because they are shareholders.
• Give day to day instructions to staff as “owners” unless they also hold an officer role or have authority delegated to them.

In a small business, shareholders often expect to “be in charge.” Legally, that control is usually exercised indirectly, by choosing the directors and by using shareholder agreements to set ground rules.

2) Directors: the decision makers at the top

Directors sit on the board. The board is responsible for managing, or supervising the management of, the business and affairs of the corporation. Think of directors as the company’s strategic brain. They set direction, approve big decisions, and oversee risk, finances, and governance.

Common director responsibilities:

• Approving budgets, major contracts, borrowing, and significant purchases or sales.
• Appointing officers and defining their authority.
• Ensuring the company meets core legal obligations (records, filings, approvals).
• Managing conflicts of interest and related party transactions properly.
• Monitoring the company’s financial health and asking the hard questions.

Key point: directors owe duties to the corporation itself, not to any one shareholder. Under the federal statute, directors and officers must act honestly and in good faith with a view to the best interests of the corporation, and exercise the care, diligence, and skill of a reasonably prudent person in comparable circumstances. Those themes also show up across Canadian corporate statutes, even where the wording differs.

Directors also need to understand that “best interests of the corporation” is not always “what the majority shareholder wants today.” In a dispute, that distinction matters.

3) Officers: the operators who carry out the plan

Officers are the people given authority to run the business day to day. Typical officer titles are President, CEO, Treasurer, Secretary, or “any other officers” the board appoints. Officers implement the board’s decisions, manage staff, sign contracts within their authority, and keep the machine running.

Common officer responsibilities:

• Executing contracts, hiring, supervising operations.
• Managing banking, bookkeeping, and reporting to the board.
• Keeping corporate records current, including minute book upkeep and required filings (often handled with legal support).
• Bringing major decisions to the board for approval when needed.

Officers also owe duties to the corporation. Under the federal statute, the same duty of loyalty and duty of care standard applies to officers.

4) One person can wear all the hats, and many small corporations do

In a closely held company, it is common for one person to be:

• The sole shareholder (owner),
• The sole director (board), and
• The key officer (management).

That structure can be perfectly valid, and it is often efficient early on. Nova Scotia’s “Table A” style governance documents even contemplate situations where a company has only one director and officer signing share certificates.

But here is the trap: wearing all hats does not erase the boundaries between hats. You still need to document decisions in the right way. For example:

• A shareholder decision belongs in a shareholder resolution.
• A board decision belongs in a directors’ resolution or minutes.
• Operational actions belong in officer authority and records.

If you do not separate these properly, you create avoidable risk when you apply for financing, bring in a new shareholder, sell the business, or face a dispute.

5) A simple way to remember the roles

Use this mental model:

• Shareholders determine who will be the directors and approve big structural moves.
• Directors set the rules and direction and oversee the company.
• Officers run the day to day within the authority the directors give them.

6) Before you incorporate, make two decisions you cannot afford to wing

1. Who will be the directors on day one?
   Even in a one-person company, decide who the director is and keep board records clean.
2. Will there be more than one shareholder?
   If yes, you should strongly consider a shareholder agreement to set expectations on decision making, salaries, dividends, buyouts, and what happens if someone wants out.

This article is general information, not legal advice for your specific situation. If you tell me your ownership plan (solo founder, two founders, family ownership, holding company, etc.), I can help you pressure test the cleanest setup for your facts.