Pg 18

Question 1

What is the shape of the corporate pattern regarding shareholders and directors?

Answer 1

It is a triangle with shareholders at the bottom

Question 2

What are the two major jobs in a corporation?

Answer 2

Officers and directors

Question 3

What are the different types of officers in a corporation?

Answer 3

Secretaries, CEO, president, treasurer, etc.

Question 4

What do principal corporate officers and executives do?

Answer 4

They execute policies and get authority from the board

Question 5

What does the secretary of a corporation do?

Answer 5

• maintains and authenticates the records of the corporation such as minutes from meetings
• ensures that all notices are given according to the bylaws
• affixes seals to all documents that need to be authorized by the corporation
• authenticates records of the corporation
• keeps the register of the post office address of each shareholder
• in general charge of stock transfer books of the corporation

Question 6

What is the only officer that every corporation is required to have?

Answer 6

A secretary

Question 7

What does the CEO of a corporation do?

Answer 7

• hire secretaries
• order equipment and supplies

His authority comes from bylaws that describe the responsibility of principal officers.

Question 8

What does the president of a corporation do?

Answer 8

• supervises and controls all affairs of the corporation
• presides at all meetings
• signs certificates for shares, deeds, mortgages, bonds, contracts, etc.

Question 9

What does the treasurer of a corporation do?

Answer 9

He’s responsible for all funds and security to the corporation, and getting receipts for money, depositing money in the corporation’s name with the bank

Question 10

What are the jobs of directors of a corporation?

Answer 10

• appoint the CEO and other officers
• determine corporate policy
• oversee the officers’ work
• manage the affairs of the corporation
• supervise management
• issue stock, set dividends, monitor performance of officers and the corporation

Question 11

What are fundamental corporate acts that are required to have shareholder approval?

Answer 11

• charter amendments
• consolidations and mergers
  – voluntary dissolution
  – sale or lease of all or substantially all of the corporate assets
• to amend the articles of incorporation
  – create additional classes of preferred stock

Question 12

How are directors chosen?

Answer 12

They are elected by shareholders and they usually serve annual terms

Question 13

How do you remove a director from a corporation?

Answer 13

Shareholders can remove them any time with or without cause through the charter or bylaws, or they are removed when their term expires

Question 14

What is the job of shareholders?

Answer 14

They are owners of the corporation

Question 15

What are the benefits of being a shareholder?

Answer 15

You have limited liability, so this means you’re protected from personal liability for corporate loss

Question 16

What are the jobs that shareholders have?

Answer 16

The right to elect and remove directors at any time, even without cause.

Question 17

How often do shareholders usually meet?

Answer 17

Usually once a year

Question 18

What is the majority rule or usual method for how directors are elected?

Answer 18

Generally the holder of the majority of the voting shares has the ultimate power to control the corporation

Question 19

What does it mean that the power lies with shareholders collectively?

Answer 19

No one shareholder has specific powers, so they always need a vote to decide things

Question 20

In order to amend the articles of incorporation, how is it done?

Answer 20

Corporations usually use a standard state form or create their own

Question 21

What does it mean for shareholders to have limited powers of initiative?

Answer 21

Their participation is usually limited to assent, request, or recommendation

Question 22

What does it mean for a shareholder to be a record holder?

Answer 22

His name is registered on the records of the corporation, but that doesn’t necessarily mean he’s the actual owner, because he could be the beneficial owner

Question 23

1

Answer 23

1

Question 24

Who must usually approve mergers?

Answer 24

Both shareholders and the directors, usually neither can unilaterally approve it. Plus a merger cannot be initiated by the shareholders. Need a majority of all outstanding voting stock to vote for a merger.

Question 25

What are the two exceptions where you don’t necessarily need a majority of all outstanding voting stock to vote for a merger?

Answer 25

• de minimus exception

– short form merger exception

Question 26

What is the de minimus exception that doesn’t require a majority vote of all outstanding voting stock to vote for a merger?

Answer 26

Shareholder approval is not required if a corporation is the surviving corporation for the merger, as long as the shareholders keep the same number of shares with identical preferences and rights.

Question 27

What is involved in the exception to the rule that you need a majority of all outstanding voting stock for a merger that calls for “short form merger exception“?

Answer 27

When a parent corporation owns all or most of the stock of a subsidiary corporation, at least 90%, there is no need for approval