Management and control Flashcards
Annual and Special Meetings
A corporation must hold an annual meeting of
shareholders at a time that is stated or fixed in accordance with the bylaws. Special
meetings can generally be called by:
(1) Persons authorized under the articles of incorporation;
(2) A demand from shareholders that accounts for at least 10% of the votes entitled
to be cast at the meeting; OR
(3) The board of directors for limited purposes (e.g., dissolution of the corporation).
b) Notice. Generally, shareholders who are entitled to vote must be provided with notice
of all annual and special meetings. For special meetings, the notice must:
(1) State the purpose of the meeting; AND
(2) Be provided 10-60 days before the meeting commences (in most states).
quorum
A quorum must be present in order for the shareholders to take action at a
meeting. Unless otherwise set forth in the articles of incorporation, a quorum exists
when at least a majority of the shares entitled to vote are present.
Non-Voting Shares.
The articles of incorporation may provide that holders of certain types of shares cannot vote unless specific conditions are satisfied. However, such shareholders are still entitled to receive notice even though their shares have non-voting status.
Weight of Vote
Unless otherwise provided by law or the articles of incorporation, all
shareholders’ votes are counted equally, regardless of class.
Record date
A shareholder is only entitled to vote if she acquired voting shares before a designated record date. Generally, the record date may be designated in the bylaws
no more than 70 days prior to the shareholder meeting.
Cumulative Voting
Shareholders elect directors either directly (each share equals one
vote) or cumulatively. Cumulative voting is usually a more favorable method to
represent the interests of minority shareholders. In cumulative voting, voters cast as
many votes as there are seats, but voters are not limited to giving only one vote to a
candidate. Instead, they can put multiple votes on one or more candidates.
Vote by proxy and revocation
A vote by proxy allows a shareholder to vote without physically attending the
shareholder’s meeting by authorizing another person to vote her shares on her behalf.
A valid proxy must exist in the form of a verifiable electronic transmission or a signed
written appointment form.
A proxy is freely revocable by the shareholder UNLESS the recipient of the proxy has an
economic interest in the shares.
inspection of books and records
A shareholder possesses the right to inspect corporate books and
records so long as the purpose for the inspection is proper. In order to be proper, the
purpose for the inspection must be reasonably related to a person’s interest as a
shareholder. However, a shareholder may inspect the articles of incorporation and
bylaws without providing a proper purpose.
Procedural requirement for inspection of books
Generally, a shareholder must:
(1) Make a written demand to inspect corporate books and records and allow the
corporation a reasonable amount of time to respond (usually 5 days); AND
(2) Conduct the inspection during regular business hours at the corporation’s
principal office.
