FACT PATTERN 3: DIRECTORS AND OFFICERS (HEAVILY TESTED)- STATUTORY REQUIREMENTS — DIRECTORS Flashcards
What is the minimum requirement to be a director?
You have to be an adult natural person.
How many directors does there need to be of a corporation?
one or more.
Where are the names of the initial directors usually found?
Initial directors are usually named in the articles.
who elects directors thereafter?
Shareholders at the ANNUAL MEETING.
Generally, how often are directors elected?
Generally, the entire board is elected each year
Under what circumstance would the directors not be elected annually?
When there is a staggered board
How is a staggered board usually done?
A staggered board is divided into halves or thirds, with one-half or one-third elected each year.
Where is the company rule authorizing a staggered usually written?
In the Articles of Incorporation
Can shareholders remove directors before their terms expire?
Yes
What vote is required to remove a director before their term expires?
a vote of a majority of the shares entitled to vote.
On what bases can shareholders remove a director?
With or without cause.
Suppose there’s a vacancy on the board (e.g., a director resigns before her term is up). Who selects the person who will serve as a director for the rest of the term?
Generally the board or the shareholders
What if the shareholders create a vacancy on the BOD by by removing a director before their term is up. Who selects the person who will serve as a director for the rest of the term?
the shareholders generally must select the replacement.
What are the only two ways the BOD can take an act?
- Unanimous agreement in writing or
2. At a meeting (which has to satisfy the quorum and voting requirements)
What if directors agree to an act through individual conversations, without a meeting or unanimous written agreement?
That act is void. Unless ratified later validly.
