Corporations

Question 1

what are “publicly held” corporations characterized by?

Answer 1

a public secondary market in which shares of the company are listed and traded (ex. IBM, Microsoft)

Question 2

what are “closely held” corporations characterized by?

Answer 2

1) absence of secondary market for its stocks
2) often (not always) a relatively small number of shareholders who actively participate in the corporation’s management
3) may display characteristics of partnerships

Question 3

what are the rights of shareholders in a corporation? (6) RIRPPV

Answer 3

1) receive payment of dividends when declared by the board
2) inspect corporate books & records
3) receive distribution upon termination
4) purchase proportionate share of a new issuance or corporate stock to maintain current ownership
5) percentage (preemptive rights)
6) vote on limited ranges of issues

Question 4

what are shareholders entitled to vote on?

Answer 4

1) election of directors
2) fundamental transactions
3) certain other particulars, such as approval of independent auditors

Question 5

what type of lawsuits may a shareholder file?

Answer 5

“shareholder derivative suit” to redress wrong suffered by the corporation

Question 6

who does the damages recovered in a derivative suit goto?

Answer 6

the corporation