Designated Hierarchy in Privately-Held Companies

Designated Hierarchy in Privately-Held Companies

The success of every private company is highly dependent on its hierarchy and structure. 

Even the top and highly successful private companies dedicate their success to proper management and hierarchical structure. 

The structure of the hierarchy of a privately held Company consists of supervisors, officers, investors, and executives. 

A private company's structural design ensures that every responsibility is distributed evenly among different departments and concerned authorities. 

In other words, the growth and sustainability of a private company are determined by an organized structure and designated hierarchy. 

The Designated Hierarchy In Privately-Held Companies is explained in detail by ESPECIA.

Privately-Held Companies

An LTD or private limited company is a business entity that is privately held. They have shared limits. 

Because they are liable to sell their shares to stakeholders who are restricted from sharing those shares publicly. 

A private limited company or LTD is owned by a group of people who are known as shareholders. 

Business entities and small business startups often choose private limited or privately held companies as the key to success because of their suitable and proper business infrastructure. 

Due to this main reason, a privately held company often has different board directors as well as a management team. 

It is a matter of fact that almost 93% of companies in India are registered as privately held or private limited companies. 

All private limited companies in India are regulated or governed by a government body, popularly known as the ministry of corporate affairs or MCA. 

It is important for a company to have at least 2 shareholders to act as a privately held company in India. 

As per limitations, a maximum of 200 members or people are allowed. There are various favourable reasons for a company nowadays due to which they are being registered as a privately held company. 

The concept of Designated Hierarchy

The designation is a term used to refer to the titles of officials or businesses given to different company members. 

Different titles define their particular rules and responsibilities for individuals working in a particular department. 

Hence, Designated Hierarchy plays an important role in a privately held company to maintain a systematic process, credibility, transparency, and growth.

A private company follows a chain of command system in India. This chain of command system consists of a board of directors at the top level. 

Shareholders, as well as the chairman, now follow this level. Shareholders of privately held companies are responsible for selecting the chairman of the board. 

The main responsibility of the chairman of the board is to protect the interest of shareholders.

In addition, he is also responsible for ensuring that the company is running based on stable culture and profitability. 

The managing director, or MD, follows the next command system. The command board of directors elects the managing director of a private company. 

MD is mainly responsible for looking after the management system of a company. 

In legal words, a managing director is a person who is elected after passing a resolution in a company's general meeting or through AoA (the articles of association). 

MD is also responsible for representing the management system of a privately held company as top management. 

An MD has been entrusted with powers regarding affairs as well as management of the company. 

Other members, such as executives, supervisors, managers, etc., can be appointed by both the managing director and other board directors. 

The CEO or chief executive officer follows the next chain of command. A CEO is also the head of executive affairs in a privately held company. 

He is responsible for making overall decisions, such as managerial decisions regarding the affairs of a company. 

The board of directors appoints the CEO. The CEO is also in charge of implementing and designing various strategies as well as policies in a private company. 

He is also responsible for guiding other individuals and departments to complete the objectives and goals of the company. 

However, shareholders must appoint directors in every private company in India. 

Top officers in a privately held company

There are four main four departments in every privately held company. These departments are the financial, human resource, manufacturing and production, and sales and marketing departments. 

Other than these departments, there are several other small departments such as technology, strategy, etc. 

The top-level executive is an office that is the head of all these departments in a private company. 

Some of the main types of top executives in a privately held company include CSO or chief strategy officer, CMO or chief marketing officer, CTO or chief technology officer, CLO or chief legal officer, CFO or chief financial officer, and COO or chief operating officer. 

Let's study the roles of each in detail:

  • Chief strategy officer: a CSO is similar to the chief operating officer. It is a top-level executive in a private company who is responsible for laying out a strategic plan for a problem-free operation in a company. A CSO helps the CEO regarding various operations such as strategic initiatives, executing, communicating, developing, and other procedures. 
  • Chief marketing officer: a CMO is an official who is in a senior position in marketing departing from a privately held company. The main task assigned to the CMO is managing marketing campaigns, increasing marketing revenue, improving the company's brand image, etc. This official is responsible for directly dealing with departments and sub-departments concerning a company's sales and marketing. A CMO is a vital position in a private company responsible for the generation of direct revenue.
  • Chief legal officer: a CLO is also known as the chief legal executive in a privately held company. The duties of a CLO are the reduction of litigation as well as legal risk. The main responsibility of a CLO also includes addressing and managing the company's legal concerns. They are also responsible for regulating these concerns to other employees and shareholders. CLO. Regulates every legal matter of the company; in other words,  CLO is the main person of communication in these matters.     
  • Chief technology officer: a CTO in a private company is responsible for handling the technology department in the company. The person is responsible for maintaining, managing, supervising, etc., the technology as well as security matters in a company. Furthermore, a CTO is also responsible for overlooking a private company's asset maintenance and related policies. 
  • Chief financial officer: a CFO in a private company is responsible for planning finances and managing the cash flow. The official is also responsible for overlooking the company's monitoring, planning, and financial management. He is also known as the treasurer of the company. The CFO of the company also carries out SWOT analysis regularly. Other responsibilities of the CFO include financial matters, internal controls, fundraising, accounting, planning, budgeting, bookkeeping, etc., in a private company. 
  • Chief operating officer: a COO of a privately held company is responsible for executing business plans with the help of the CEO. A COO is the second position in the command chain of a privately held company. CO is also known by other titles such as chief operating officer as well as chief operations director. A COO also determines the financial strength. A COO acts not only as a supervisor but also as a leader of a privately held company. A COO makes sure that every employee and department in the company is implementing and working according to the plans of the CEO. 

Managers and supervisors in a privately held company

All supervisors and managers in a privately held company are responsible for regularly reporting to the chief or top executives in that company. 

These rules apply to other small departments and sub-departments of the company. 

Some roles and responsibilities of managers and supervisors are given below: 

  • A privately held company's HR or human resource managers are responsible for leading employees; in other words, human resource managers are a link between the management and employees.
  • Marketing managers in a private company have several functions, especially in the marketing department. They play an important role in executing a private company's marketing and sales policies and strategies. 
  • Legal managers in a private company are responsible for managing and handling regulatory and legal matters. 
  • Technology managers in a private company come under the assistance of the chief technology officer or CTO in a privately held company. The main role of technology managers under the CTO is to undermine the technological aspect of the company. 
  • Financial managers come under the financial department in a company. The main role of a financial manager is to take care of financial operations and policies concerning it. 
  • The operations manager in a private company is responsible for building operations efficiency as well as strategic inputs for better results. 

 Apart from the supervisors mentioned above and managers, there are various other managers in different departments of a privately held company. 

These managers include the general manager, function manager, regional manager, accounts manager, and many more. 

These subordinates or sub-managers work under their respective departments, top executives, and divisional managers to implement their responsibilities. 

A subordinate is a term that is used to refer to an official or person working with managers. 

The main responsibility of subordinates is to execute as well as implement various strategies and policies. 

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A privately held company's processes and structural practices are highly determined by designation and its hierarchical order. 

In other words, the designations are privately responsible for determining operational excellence and good communication between different departments. 

That's why private companies need to have a proper structure for an organization to keep all employees and every member of the company in their position. 

In addition, these designations are also important to define every rule and regulation to their concerned department and official. 

Some divisions in a private company include human resources, finance, manufacturing and marketing. 

Apart from these, a company has various horizontal subdivisions that include technology and strategy. 

Some common designation in a private limited company includes manager, vice president, chief technology officer, chief operating officer, secretary, chief financial officer, chief executive officer, managing director, chairman, and director. Every day has its title of responsibility and importance in the company.

FAQs Related to Designated Hierarchy In Privately-Held Companies

1. What are the main designation levels in a privately held company?

Private companies' main designations include chief technology officer, chief operating officer secretary, chief financial officer, chief executive officer, managing director, chairman, and director.

2. Which position in a private company is known as the highest position?

The highest position in a private company is known as chief executive officer or CEO. It is the top most and highest ranking executive in a private company. The main responsibilities of a CEO include making important corporate decisions and managing the resources and operations of a company. They act as a link between corporate operations as well as the board of directors. 

3. What are some designations that come below CEO?

The designation that comes under CEO or chief executive officer includes a chief operating officer or COO as well as a chief financial officer or CFO.

4. Who is more powerful, a director or CEO of a Privately held company?

A CEO of a private company is superior to a director in a private company. 

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