Officers and Other Employees Flashcards
What document delineates the type of officers?
The bylaws
When does an officer have actual authority?
When granted by the bylaws or board of directors.
When does an officer have implied authority?
To carry out those duties by virtue of her status or position.
- does not have the authority to bind through extraordinary acts.
When does an officer have apparent authority?
When the corporation holds the officer out as having authority.
What level of indemnification can an officer receive?
The same amount as board members.
Consolidation
When a surviving corporation is created as a result of the merger rather than existing before the merger.
Statutory procedure for merger
1) Board of directors of each corporation approves the merger
2) Shareholders approve the merger (usually)
3) Appropriate Documents Filed w/ the state
What is the voting requirement for a merger?
- A majority of the votes cast.
What mergers are allowed without shareholder approval?
- parent-subsidy merger - 90% owned by the larger corp.
- minnow-whale merger - may not require approval of the large corporation if it doesn’t result in an increase of more than 20% voting shares.
When do asset sales require board or shareholder approval?
When they resemble a merger.
Does the transferor corporation remain liable for its debts when it transfers assets associated with those debts?
Yes. But the transferee may accept them.
If a shareholder objects to a merger or acquisition, what happens?
He may force the corporation to buy his stock at a fair value as determined by an appraisal.
When does a shareholder who objects to a merger not have a right to an appraisal?
When the stock could be sold on a liquid reliable market such as the NYSE.
What is the procedure for obtaining an appraisal?
1) Notice to the corporation before the shareholders’ vote on the proposed action.
2) Shareholder must not vote in favor.
3) Shareholder must make written demand for payment.
4) Corporation pays shareholder what it estimates as fair value and if they don’t agree then they get the fair value thru a court action.
5) Shareholder who disagrees w/ corporate action and has an appraisal right can’t challenge the corporate action withoug grounds of fraud or illegality.
