4) Shareholders

Question 1

shareholder’s role in mgt

Answer 1

limited to specified things – directors and officers do day-to-day mgt

Question 2

shareholders acting collectively have power to

Answer 2

1) elect directors
2) remove directors w or wo cause
3) amend bylaws
4) approve fundamental changes to the corp

Question 3

“fundamental changes” ex

Answer 3

amending articles
merger
dissolution
selling substantially all assets

Question 4

shareholder meetings: reqs

Answer 4

1) notice
2) quorum
3) voting

Question 5

shareholder mtgs: notice req

Answer 5

must timely give notice to each shareholder

must say time, date, place, purposes of mtg

Question 6

shareholder mtgs: quorum req

Answer 6

majority of SHARES entitled to vote (unless articles say otherwise–but can’t be less than 1/3 of SHARES)

Question 7

shareholder mtgs: voting req

Answer 7

(unless articles say otherwise) need yes vote from majority of shares present at mtg

Question 8

shareholders rights: statutory close corporations

Answer 8

greater – can enter shareholders’ agreement re. any phase of the corp including managing its business

Question 9

shareholders votes: how many?

Answer 9

(unless articles say differently) 1 share = 1 vote

Question 10

shareholders votes: who gets to vote?

Answer 10

must be shareholder of record on the record date

record date fixed by articles, bylaws or board - must be 10-60 days before meeting

Question 11

voting by proxy: requirements

Answer 11

• -written, signed authorization OR
• -electronically transmitted authorization OR
• -some circs: orally by phone

Question 12

proxy: term

Answer 12

whatever it says

if doesn’t say, can’t be longer than 11 mo

Question 13

proxy: revoking

Answer 13

can freely revoke whenever you want. (exception)

Question 14

proxy: how to revoke

Answer 14

1) writing delivered to the corp
2) subsequently executed proxy presented at shareholder mtg (gave to someone else), or
3) in person appearance and vote at shareholder mtg

Question 15

proxy: revoking: exception

Answer 15

can make irrevocable, IF

1) agreement explicitly says irrevocable, AND
2) proxy is coupled with an interest (proxy holder has additional interest in the company or shares)

Question 16

ways to consolidate voting power

Answer 16

1) voting agreement

2) voting trust

Question 17

voting agreement: def

Answer 17

k where shareholders bind each other to vote a certain way on particular issues

valid unless fraud or illegal objective

Question 18

voting agreement: statutory close corporations

Answer 18

may allow shareholders to make decs that are contrary to the board of directors

Question 19

voting trust: def

Answer 19

transfer of legal title (shares are transferred to a trust). Can’t exceed 10 years. Stricte regulation.

Question 20

shareholders’ right to information

Answer 20

–inspect corporate bylaws
–inspect + copy accounting books and records and minutes of director and shareholder mtgs if:
purpose reasonably related to shareholder’s interest in the corp

Question 21

derivative suit: def

Answer 21

equitable action brought by a shareholder *on behalf of the corp and for the corp’s benefit

usu alleging breach of fiduciary duty by officers or directors

Question 22

derivative suit: right to bring

Answer 22

sharehodlers have

Question 23

derivative suit: prereq to bring

Answer 23

written demand of directors to enforce the rights of the corp UNLESS can demonstrate that would be futile

Question 24

shareholder liability: general rule

Answer 24

none (for debts, torts, ks, etc of the corp) (is distinct entity, and these obligations belong to the corp)

Question 25

shareholder liability: exception

Answer 25

piercing the corporate veil – courts permit when necessary to avoid grave injustice

Question 26

piercing the corporate veil – factors

Answer 26

1) corporation under-capitzlied
2) corporate formalities not honored or observed
3) corporate and personal funds comingled
4) corporate entity is no more than alter-ego of shareholders