Management and Control Flashcards
What are the two types of shareholder meetings?
(1) Annual meetings
(2) Special meetings
What are the requirements for a shareholder meeting?
(1) Call
(2) Notice
(3) Quorum
(4) Voting eligibility
How much notice is required for a shareholder meeting?
At least 10, no more than 60 days
What is the general rule for what constitutes a quorum?
When shares representing a majority of the votes entitled to be cast are present
What are the types of shareholder voting methods?
(1) Regular voting
(2) Straight voting for electing directors
(3) Cumulative voting for electing directors
(4) Proxy voting
(5) Class voting
(6) Voting trusts
(7) Shareholder voting agreements
How is voting eligibility determined?
Set by the record date, which is a cutoff date set by the corporation
What is regular voting?
Number of votes in favor exceeds number of votes opposing
What is straight voting for electing directors?
Each board seat is treated as a separate election, requiring only 51% of all votes cast
What is cumulative voting for electing directors?
Multiply a shareholder’s number of shares by the number of seats up for election. Each shareholder may cast that number of votes in total amongst all the seats. It allows minority shareholders to obtain representation
What is proxy voting?
When shareholders appoint someone to vote their shares for them
When is a proxy irrevocable?
(1) Appointment for states that the proxy is irrevocable
(2) Appointment must be coupled with an interest
What is class voting?
Shares are divided into classes and each class of shares votes as a separate voting group
What is a voting trust?
An arrangement by which one or more shareholders agree to transfer their shares to a trustee. Trustee only has the right to vote, nothing else
What is a shareholder voting agreement?
Basically a contract between shareholders to vote in a certain way
What are the requirements for a board meeting/action?
(1) Call
(2) Notice (only for special meetings)
(3) Quorum
(4) Sufficient vote
What powers may board committees generally exercise?
The powers of the board of directors
What may a committee not do?
(1) Authorize or approve distributions to the shareholders, except according to a formula or method prescribed by the board of directors
(2) Approve or propose to shareholders action that must be approved by shareholders
(3) fill vacancies on the board
(4) Adopt, amend, or repeal bylaws
What type of relationship do an officer and corporation have?
An agency relationship
Who may bind a member-managed LLC?
The LLC’s members
What grants members actual authority in a member-managed LLC?
The LLC’s operating agreement
Do members have the authority to bind a manager-managed LLC?
Generally not
What area of law governs a member’s (member-managed) or manager’s (manager-managed) ability to bind the LLC?
Agency
Who do an LLC’s debts, obligations, and liabilities belong to?
The LLC itself
What is a shareholder agreement?
An agreement that alters the usual rules relating to corporate governance
What is required for a shareholder agreement to be valid?
(1) Unanimous
(2) Must be conspicuously noted on the front or back of each outstanding stock certificate
What is oppression?
A cause of action allowing minority shareholders to sue majority shareholders for oppressive conduct
What are the remedies for an oppression claim?
(1) Dissolution
(2) Buyout of the minority shareholders
What are the two tests to determine whether conduct is oppressive?
(1) Reasonable Expectations test
(2) Burdensome, harsh, or wrongful conduct test
Who may breach a board deadlock?
Shareholders or the court
How may a court break a director deadlock?
Dissolution
When may a court dissolve a corporation for director deadlock?
(1) The corporation is suffering or threatened with suffering irreparable injury because of the deadlock; or
(2) The corp’s business can no longer be conducted to that advantage of the shareholders
