Future Business Leaders of America (FBLA) Business Management Practice Test

Who acts as the legal representative of a company's stockholders?

1. Finance department

2. Human resources department

3. CEO

4. Board of directors

The correct answer is: Board of directors

The board of directors serves as the legal representative of a company's stockholders. This group is tasked with making strategic decisions on behalf of the shareholders and ensuring that the company is managed in a way that aligns with the interests of those investors. The board oversees the company's management, making high-level policy decisions and providing guidance and oversight, which is a critical function in protecting the stockholders' investment and ensuring accountability. The finance department, while responsible for managing the company's financial resources, does not have the authority to make decisions on behalf of stockholders. The human resources department primarily focuses on employee-related functions, such as recruitment and compliance with labor laws, which do not involve representing the interests of stockholders. The CEO, although also a key figure in the company's management, primarily executes the strategies determined by the board rather than representing stockholders in a legal capacity. Thus, the board of directors is the correct answer as it legally upholds the interests of the shareholders and guides the direction of the company.