Pg 18 Flashcards
What is the shape of the corporate pattern regarding shareholders and directors?
It is a triangle with shareholders at the bottom
What are the two major jobs in a corporation?
Officers and directors
What are the different types of officers in a corporation?
Secretaries, CEO, president, treasurer, etc.
What do principal corporate officers and executives do?
They execute policies and get authority from the board
What does the secretary of a corporation do?
- 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
What is the only officer that every corporation is required to have?
A secretary
What does the CEO of a corporation do?
- hire secretaries
- order equipment and supplies
His authority comes from bylaws that describe the responsibility of principal officers.
What does the president of a corporation do?
- supervises and controls all affairs of the corporation
- presides at all meetings
- signs certificates for shares, deeds, mortgages, bonds, contracts, etc.
What does the treasurer of a corporation do?
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
What are the jobs of directors of a corporation?
- 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
What are fundamental corporate acts that are required to have shareholder approval?
- 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
How are directors chosen?
They are elected by shareholders and they usually serve annual terms
How do you remove a director from a corporation?
Shareholders can remove them any time with or without cause through the charter or bylaws, or they are removed when their term expires
What is the job of shareholders?
They are owners of the corporation
What are the benefits of being a shareholder?
You have limited liability, so this means you’re protected from personal liability for corporate loss
What are the jobs that shareholders have?
The right to elect and remove directors at any time, even without cause.
How often do shareholders usually meet?
Usually once a year
What is the majority rule or usual method for how directors are elected?
Generally the holder of the majority of the voting shares has the ultimate power to control the corporation
What does it mean that the power lies with shareholders collectively?
No one shareholder has specific powers, so they always need a vote to decide things
In order to amend the articles of incorporation, how is it done?
Corporations usually use a standard state form or create their own
What does it mean for shareholders to have limited powers of initiative?
Their participation is usually limited to assent, request, or recommendation
What does it mean for a shareholder to be a record holder?
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
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Who must usually approve mergers?
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.
What are the two exceptions where you don’t necessarily need a majority of all outstanding voting stock to vote for a merger?
- de minimus exception
– short form merger exception
What is the de minimus exception that doesn’t require a majority vote of all outstanding voting stock to vote for a merger?
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.
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“?
When a parent corporation owns all or most of the stock of a subsidiary corporation, at least 90%, there is no need for approval
