Shareholders own the stock in the firm which provides them control over the firm’s operations while directors need to govern and oversee the management of the business. The shareholders possess the right to select the board of directors and also to vote on resolutions. The degree of shareholder right is determined by the number of stock owned by the shareholder. The board of directors needs to ensure protection of shareholder interest by ensuring that the management considers the shareholder interest first while making decisions. The board of directors hires the management to manage the daily operations of the firm and establishes the policies and procedures along with the top management. Shareholders cannot involve in company operations directly but they can influence the board of directors while making important decisions.
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