When Incorporating a nonprofit organization, you may encounter certain terms very frequently. A brief of these is mentioned below –
1. Shareholders – A shareholder is a person owning stocks in a corporation.A share holder may be entitled to voting rights and to dividends(in case of equity shares) or returns (for preference shareholders)in case of a ‘for-profit’ organization. However in Nonprofit organizations – a shareholder is not entitled to any dividends or returns- though he may still have voting rights.
2. Board of Directors – This is the top tier body of an organization that is responsible for making major organizational policies and for electing officers. In case of small organizations – the board members may also undertake the roles of the officers. Many states also allow for incorporation with a single member on the board.
3. Officers – Collective term used for individuals who are responsible for running the day-to-day activities of the nonprofit organization. The typical designations for officers include – president, secretary, treasurer, CEO, CFO etc. There are no hard and fast rules for naming of officers and an organization is free to choose its own designations based on the nature of its activities.
4.Registered Agent – The registered agent (also called the ‘resident agent’ in some cases is a person identified by the corporation to recieve all legal notices and documents on behalf of the corporation. The registered agent is generally required to sign an undertaking by most of the states agreeing to carry on this responsibility by making himself available at the registered office of the corporation.