Ch. 44 Shareholder rights Flashcards
- Votes
- Receives Dividends if declared
- Inspects books at reasonable times
RIghts of Common Shareholders
Minimum acquisition price
Par value
found by dividing the value of corporate assets by the number of shares outstanding
book value
documents evidencing shareholders ownership of stock
certificate of stock
an unsecured bond of a corporation with no specific corporate asset pledged as security for payment.
Debenture
contract or agreement to buy a specific number and kind of shares when they are issued by a corporation
Stock Subscription
stock exchange price
market value
priority to dividends and liquidation rights(right to assets)
Preferred stock
some larger debt offerings are structured to require and indentured trustee and possibly a sinking fund
Bond Indentures
1.preference in receipt of dividends cum and non
2. participation rights
3. convertables
particular preferred preferences
Bonds, notes, bills, debentures
types of corporate debts
some larger debt offerings are structured to require an indentured trustee and possibly a sinking fund
Bond Indenture
- stock subscription
- transfer of existing shares
ways stocks are required
- sale
- gift
- inheritance
- execution to pay creditors- involuntary
transfer of existing shares
- negotiate stock certificate
- physical transfer of certificate
- notation of transfer on corporate minute book
transfer mechanics
- Must be in writing- statute of frauds
- may be either pre-incorporation or post incorporation
Requirements of stock subscription agreement
Proxy agreements and voting trusts
-agreements to have someone else vote your stock must be in writing
- proxy agreements are single use, while voting trust may extend for many yeats
Rules of stock transfer restrictions
restrictions on the sale of stock must be noted on the face of the stock certificate
What type of corporate voting is considered best practice
cumulative
preemptive rights
current shareholders have the first rights to additional share they they may purchase up the the same percentage of total shares they have now
Two types of lawsuits available to shareholders
- Minority shareholder suits
- shareholder derivative suits
piercing the corporate veil to hold shareholders liable
- alter ego theory - joe the plumber
- abuse of the corporate form- taxi example
- insufficient corporate capitalization- no assets
- wage claims
- unpaid stock subscriptions
- unauthorized dividends
Other exceptions to limited liability of shareholders
