1 CHAPTER XVIX: Corporate Boards, Power and Voting A. THE CORPORATE CHARTER AND BYLAWS

Corporate governance might be defined as the system of rules, laws and other factors by which companies are directed and controlled. It is concerned with relationships among corporate stakeholders in determining the corporation’s direction, management and performance. In the Unites States, Europe and Australia, corporate managers, particularly the Chief Executive Officer (C.E.O.), boards of directors and shareholders play the major roles in governance in the governance of most larger corporations. With some exceptions (such as with cooperatives), customers, creditors, community interest groups, suppliers and employees usually play more minor or even insignificant roles. In Chapter 1, we characterized the firm as a nexus of contracts. The most important of these contracts is the corporate charter (also known as the articles of incorporation), which sets the firm apart from its owners as a separate entity. The corporate charter issued by the government authority but prepared mostly by the firm’s incorporators will specify the following: • The name of the corporation1 • The purpose of the corporation • The corporation’s term of existence (usually perpetual