What Is a Principal Officer in a Corporation?

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A principal officer is usually a manager in a corporation who is authorized to exercise some corporate powers, such as signing contracts and making major business decisions. Corporate law distinguishes officers from regular employees because officers have a greater responsibility to conduct the business of the corporation.

A principal officer in a corporation is also called an executive officer. The chief executive officer is typically the most senior officer in the corporation and reports to the board of directors, a group of managers that oversees the activities of the corporation. The role of the CEO varies from one organization to the next, but it generally involves leading the organization. Other types of principal officers include the chief financial officer, who manages financial risks, directs financial planning and maintains financial records, and the chief operating officer, who directs the daily operation of the corporation. Some businesses assign the title of president to a senior principal officer who ranks above corporate vice presidents and works closely with the CEO to meet the objectives of the organization.

In a limited liability company the principal officers are the company’s managers. In a partnership, the principal officers might also called managing partners, executive partners or administrative partners. In a sole proprietorship, the principal officer is the sole proprietor.