MO Corps: Rights of SHs

Question 1

In a derivative suit, A SH is suing to enforce

Answer 1

the Corp’s cause of action – always ask if corp could have brought the suit

Question 2

What are the requirements for bringing a SH derivative suit?

Answer 2

Contemporaneous stock ownership (at least one stock when claim arose)
Adequacy – A SH must fairly and adequately rep the corp’s own interest
Demand– make demand on ds to bring own corp suit and demand must be rejected by board or at least 90 days have passed since demand.

Question 3

Voting– Who has right to vote at an upcoming meeting where voting occurs?

Answer 3

Only the record date owner votes. Record date is voter eligibility cut off date set by board for any day within 70 days period in advance of meeting.

Question 4

Shareholder Voting Proxies

Answer 4

(I) writing; (ii) signed by record SH; (iii) sent to secretary of corporation; (iv) authorizing another to vote the shares; (v) valid for only 11 months

Question 5

Proxies are revocable UNLESS:

Answer 5

1. Must be labeled irrevocable; AND

2. Coupled with an interest

Question 6

Where do SHs vote?

Answer 6

a. Properly notice annual meeting

b. Specially noticed special meeting

Question 7

Properly noticed annual meeting

Answer 7

Every corp must have an annual meeting at which at least one director slot is open for election
Notice must include time and place of meeting

Question 8

Specially noticed Special meeting

Answer 8

Called by board, prudent or holders of 10% of voting shares.

1. Meeting to vote a proposal or a fundamental corp change
2. SPecial notice for the special meeting must include: meetings special purpose because nothing else can happen in that meeting if not in notice

Question 9

Quorum

Answer 9

Focuses on number of shares represented –requires majority of outstanding shares when the meeting begins unless otherwise provided by Articles

Question 10

X corp has 120000 shares outstanding. X corp has 700 SHS. What or who constitutes a quorum?

Answer 10

Quorum is majority of all shares that must be represented when meeting starts. in this case, 60,001 shares

Question 11

Vote:

Answer 11

IF quorum is present, action is approved if the votes cast in favor of the proposal exceed the votes cast against the proposal

Question 12

X copr has 120,000 shares outstanding, 80,000 shares are represented at meeting but only 50,000 vote on issue. How many shares must vote the proposal to be accepted by SHs?

Answer 12

25,001 – for the vote, votes cast in favor must exceed votes against.

Question 13

Pooled or block voting methods– two ways

Answer 13

a. Voting Trusts– Formal trust in writing of voting power to voting trustee for up to 10 years
b. SH voting agreement– enter in writing to vote shares as required which is binding and enforceable on all of signors.

Question 14

Cumulative Voting for Directors

Answer 14

Multiply the number of shares times the number of directors to be elected therefore: 9000

Question 15

Right of SH to examine the books and records of the corporation– to do so..

Answer 15

ANY SH shall have access upon 5 days written notice, stating a proper purpose

Question 16

Dividends to be declared in Board’s DISCRETION UNLESS

Answer 16

Corporation is INSOLVENT or would be rendered insolvent by the dividend.
Board members are liable personally for unlawful distributions, but have a defense of good faith reliance on Financial officer’s representations regarding solvency.

Question 17

Priority of Distribution– BoD of C’s Corp decides to declare dividends totaling $400,000. Who receives dividends if the outstanding stock is:
a) 100,000 shares of common stock

Answer 17

Common stock paid last and equally.

400/100 = $4 per common stock

Question 18

Priority of Distribution– BoD of C’s Corp decides to declare dividends totaling $400,000. Who receives dividends if the outstanding stock is:
b) 100,000 shares of common and 20,000 shares of preferred with $2 dividend preference

Answer 18

First, 20,000 of preferred get $2 each of $40,000 total. Second, the remaining $360K gets shared equally with 100K shares = $3.60 per share.

Question 19

Priority of Distribution– BoD of C’s Corp decides to declare dividends totaling $400,000. Who receives dividends if the outstanding stock is:
c) 100,000 shares of common and 20,000 shares of $2 preferred that are participating

Answer 19

First, 20,000 times $2 = $40,000
Second, the remaining 360K gets shared equally between 100K common shares and 20K preferred shares. $360/120K shares = $3.00 per share
*so preferred gets $5/share

Question 20

Priority of Distribution– BoD of C’s Corp decides to declare dividends totaling $400,000. Who receives dividends if the outstanding stock is:
d) 100,000 shares of common and 20,000 shares of $2 preferred that are cumulative (and no dividends in the three prior years)

Answer 20

4 years times $2 = $8/share. First, 20,000 gets $8/share = $160K
Second, the remaining $240 gets shared equally with common stock = 240/100 = $2.40