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Corporate management - Where to Focus?

November 6, 2012
IT Management Series

Effectively managing your corporate infrastructure is as important as managing your users, distributors, customers and commercial partners. Balancing control among shareholders, directors, officers, creditors and employees can enhance your ability to respond effectively in a dynamic marketplace.

Your corporate bylaws are a critical legal tool in balancing the influence of shareholders, directors and officers. Rather than provide for simple majority quorum and voting requirements at shareholder meetings, consider adjusting these requirements to insure investor participation without loss of control.

Your Bylaws can also be a useful tool in defining executive authority and responsibilities. By using broad or narrow language in defining the position of president, chief executive officer, vice-president, treasurer and secretary you can establish limits for executive action.

Shareholder agreements in closely held organizations can be an important tool for dispute resolution. Key buy-out provisions in the event of shareholder death or disability can preclude unwanted or hostile owners. Rights of first refusal can be adopted which provide the corporation and other shareholders with an opportunity to preclude ownership by outsiders.

Employment agreements are a useful tool for defining employment responsibilities, general corporation policies, compensation, benefits, and intellectual property protections. Employee and customer piracy should be addressed, along with trade secret compromises, protection of customer information, noncompete obligations and termination rights.

The focus of your consulting agreements will be slightly different. A detailed scope of work identifying task objectives, methodology and deliverables should be part of the contract. Payment terms, ownership rights, invoice processing and approval requirements should also be addressed.

Effectively managing your creditor relationships is critical to maintaining access to adequate financing. You will find this process considerably easier during difficult business cycles if you spend the time necessary to negotiate the terms of your loan agreements in advance.

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