Directors and Shareholders

Directors and Shareholders

Directors and shareholders are holds two different offices in a company. Equity holders invest in business, where director runs the business for shareholder. It means director are employees or agents of shareholders.

1.    Roles & Responsibilities

Directors are responsible for making all major decision to run the business, where equity holder finances the business. It means director run the business on behalf of equity holders. Directors are expected to work in the best interest of equity holders.

2.    Remuneration & Dividend

Director draw salary against services provided to the company. Remuneration and other benefits are fixed in nature and agreed by director and equity holder by a formal contract (job Contract). Equity holder on other hand is entitled to receive divided, which is not fixed in nature.

3.    Appointment & Removal

Directors are appointed by the share holder, while shareholder becomes owner by buying shares. Similarly director can also be removed by the equity holder, while shareholder can leave ownership by selling shares.

4.    Objectives & Interests

Director are more interested in short term boost of profit for salary increment and bonuses, where equity holder are more interested in long term growth and stability, because there investment is at stake.

5.    Risk in Company

Director share lower risk in the company, because at maximum they can lose a job in case of liquidation and can get new job in another company, where risk of equity holder is high, because they can lose their investment.