Corporations 16-23 Flashcards
Who has the power to issue dividends and make distributions in a corporation?
Only the Board of Directors have the power to issue dividends/distributions.
*Once declared, the SH has a legal right to that distribution.
Priority: Low
A shareholder DOES NOT have the right to compel a corporation to issue a distribution, but when may a court interfere with the board’s discretion?
They WILL interfere and order a distribution upon a showing of:
Bad faith or dishonest purpose; AND
That funds were available for the dividend/distribution.
Priority: Low
A shareholder may vote shares at a meeting without physically attending through use of a proxy.
What is required for a validproxy?
It must be signed on:
An appointment form; OR
An electronic transmission.
(oral proxy is invalid)
A proxy must be accepted by the corp. if on its face there are no reasonable grounds to deny its genuineness and authenticity.
Priority: Low
Are proxy agreements freely revocable by the shareholder?
YES, even if the proxy states that it is irrevocable.
One exception to this rule is a proxy coupled with an interest or legal right, which is irrevocable if the proxy expressly states as such.
*A proxy is only valid for 11 months (unless it states otherwise).
Priority: Low
What is a Shareholder Voting Agreement?
An agreement (with no durational limit) providing how shareholders will vote their shares. It is specifically enforceable and must be in writing and signed by all parties.
*CANNOT remove the shareholder’s right to elect or remove directors.
Priority: Medium
How is a voting trustdifferent from a voting agreement?
A voting trust is more formal. It can only last for 10 years and requires:
Legal ownership of the shares to be transferred to the trust; AND
The shareholders provide the trust agreement to the Secretary of the corporation.
Priority: Medium
When can the Board of Directors act or vote?
A quorum must be present at the time when the vote is being taken.
Quorum = a majority of the Board of Directors unless otherwise stated in the Articles of Incorporation (however at minimum one third must be present).
Priority: Low
The Board of Directors is allowed to determine the compensation of Directors and Officers.
What duty do they have concerning this?
A duty to set compensation in accordance with reasonable parameters, taking into account the needs of the corporation and ensuring they don’t waste assets.
Priority: Medium
