Can a Corporation Have Two Presidents?
Can a corporation have two presidents? Generally speaking, the answer is yes. However, it depends largely upon where your corporation is located.3 min read
2. Advantages of Multiple Presidents
3. Disadvantages of Multiple Presidents
Can a corporation have two presidents? Generally speaking, the answer to this question is yes. However, it depends largely upon where your corporation is located.
In the United States, co-presidencies are legal, but you should check your state's law. While there may not be an explicit prohibition, the wording of the legislation could be interpreted to restrict a corporation's presidency to a single person.
For example, according to California law, a corporation must have at least three officers: a president, a secretary, and a treasurer. The president serves as chief executive officer and general manager of the company. If there is no president, this role is filled by the chairman of the board. One person may hold all three officer titles, but the code says nothing about more than one person holding a single office.
In New York, while there is no explicit prohibition, the wording of the law is less ambiguous. The board of a corporation can select a president and one or more vice-presidents along with a secretary and treasurer. Since the law code mentions only a single president versus potentially multiple vice-presidents, New York may at least frown upon a corporation having more than one president.
Outside the U.S., the multiple-president model is more common.
Limited Liability Companies
Whether or not you adopt a multiple-president management structure can depend on the type of business entity you have. For example, corporations are legally obliged to have a board of directors, a president, and other officers. The Limited Liability Company (LLC), on the other hand, has a lot more flexibility as to its leadership structure.
For the most part, LLCs function like partnerships. The owners, or members, share leadership over the company equally. However, they do not have to operate this way. The members may choose to use a more traditional corporate model with a president and officers.
Another form available to the LLC is manager-management. This is where the owners divide themselves into managers who run the business and members who do not. These members consist mostly of investors who have no desire to be involved in the daily operation of the business.
Given the LLC's flexibility, it is all the more important that LLCs document their management structure in an operating agreement. They should also seek legal counsel to help them decide which management structure works best for their business.
Advantages of Multiple Presidents
There are a number of reasons why a business might decide to have more than one president:
- Delegated responsibilities. The business is able to accomplish more by sharing the leadership. One president can handle the international offices, for example, while the other takes care of business locally.
- Diversity of skills. One president with vision-casting skills can leave the day-to-day running of the business to another.
- Diversity of roles. The founder of the company can provide inspirational leadership, while someone else with executive management experience provides strategic direction.
- Training a successor. A president may bring on a younger co-president for on-the-job training with an eye to that person taking over.
- Merger transition. After a merger, the two company presidents might share leadership of the new joint company until one decides to step aside.
Disadvantages of Multiple Presidents
- Regardless of how equally the presidents share leadership, it is inevitable one will be looked upon as the person in charge. The other president will end up playing second fiddle, which may lead to problems.
- With two presidents, clients might be unsure who to talk to with regard to important decisions.
- The constant need for the presidents to report to each other regularly adds an unnecessary level of complexity to the job of leading the company.
- There might be legal issues and confusion when it comes to determining who has operational decision-making authority, or who signs contracts with third parties.
- It can create additional strain upon the company. Each president needs to know how to respect the business agreement in terms of when to consult and when to make executive decisions. They also have to come up with ways to handle when one president breaks that agreement without disrupting the company's leadership.
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