Specifics of governance model in small and medium sized companies

Bc. Kristina Palakhova

Bachelor's thesis

Abstract:

Corporations arе subject to more legal, reporting, and financial requirements than other forms of ownership. Corporate officers must meet more stringent requirements for recording and reporting management decisions and actions. They must also hold annual meetings and consult the board of directors about major decisions that are beyond day-to-day operations. Managers may be required to submit some major decisions to the stockholders for approval. Corporations that are publicly held must file quarterly and annual reports with the Securities and Exchange Commission. Most states allow entrepreneurs to incorporate without the assistance of an attorney. Some states even provide incorporation kits to help in the incorporation process. Although it is cheaper for entrepreneurs to complete the process themselves, it is not always the best idea. In some states, the application process is complex, and the required forms are confusing. The price for filing incorrectly can be high. If an entrepreneur completes the incorporation process improperly, it is generally invalid. Once the owners decide to form a corporation, they must choose a state in which to incorporate. If the business will operate within a single state, it is probably most logical to incorporate in that state. States differ—sometimes rather dramatically—in the requirements they place on the corporations they charter and how they treat corporations chartered in other states. They also differ in the tax rate they impose on corporations, the restrictions placed on their activities, the capital required to incorporate, and the fees or organization tax charged to incorporate. Delaware, for instance, offers low incorporation fees and minimal legal requirements. Every state requires a certificate of incorporation or charter to be filed with the secretary of state.

Abstract:

Corporations arе subject to more legal, reporting, and financial requirements than other forms of ownership. Corporate officers must meet more stringent requirements for recording and reporting management decisions and actions. They must also hold annual meetings and consult the board of directors about major decisions that are beyond day-to-day operations. Managers may be required to submit some major decisions to the stockholders for approval. Corporations that are publicly held must file quarterly and annual reports with the Securities and Exchange Commission. Most states allow entrepreneurs to incorporate without the assistance of an attorney. Some states even provide incorporation kits to help in the incorporation process. Although it is cheaper for entrepreneurs to complete the process themselves, it is not always the best idea. In some states, the application process is complex, and the required forms are confusing. The price for filing incorrectly can be high. If an entrepreneur completes the incorporation process improperly, it is generally invalid. Once the owners decide to form a corporation, they must choose a state in which to incorporate. If the business will operate within a single state, it is probably most logical to incorporate in that state. States differ—sometimes rather dramatically—in the requirements they place on the corporations they charter and how they treat corporations chartered in other states. They also differ in the tax rate they impose on corporations, the restrictions placed on their activities, the capital required to incorporate, and the fees or organization tax charged to incorporate. Delaware, for instance, offers low incorporation fees and minimal legal requirements. Every state requires a certificate of incorporation or charter to be filed with the secretary of state.

Keywords

Corporate governance, Corporations, Small to Medium-Sized Manufacturing Enterprises

Language used: English

Date on which the thesis was submitted / produced: 14. 4. 2016

Thesis defence

• Date of defence: 13. 6. 2016
• Supervisor: Ing. Helena Pleskotová
• Reader: doc. Ing. Karel Havlíček, Ph.D.

University of Finance and Administration

Bachelor programme / field:
Economics and Management / Business Management and Corporate Finance