When and why does a company require a board of directors? How come it can sometimes overrule or even push out the owner?
In: Economics
When a corporation starts selling shares. The Board of Directors is who shareholders vote for as a part of their partial ownership of the company.
As far as pushing out the owner of a company, it doesn’t mean the person no longer owns the company. They will still get their share of the profits. The shareholders just don’t want them running the company. They think the company will be more profitable (and therefore the stock price will go up, making them more money) with someone else.
The owner can fight that measure if they own the majority of shares in the company, but if the shareholders don’t want the owner there, and the owner is fighting them, that may cause shares to be sold, lowering the value of the stock, which hurts everyone.
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