Shareholder meetings, voting, and inspection rights Flashcards
General
Shareholder most important role is to elect directions who will oversee corp and select officers who will run it on the da to day basis, and to vote on fundamental changes
Issues:
- when do shareholders vote
- what do shareholders vote on
- what rights do shareholders have to inspect corp records
When Shareholders Vote - Annual Meeting
Most shareholder voting takes place at the annual meeting.
The corp is required to hold an annual meeting once a year to:
- elect directors
- address any other shareholder business
Time & Place - usually set out in articles of regulations, but if not stated, then held on first monday of the fourth monday after the close of the corporation’s fiscal year
When Shareholders Vote - Special Meeting
Can be called by - board of directors, president, chairperson of teh board, shareholders who control at least 25% of corp voting shares (unless designated otherwise but max 50%), officers or others in the bylaws
Requirements - to call a meeting, written requires must be delivered in person or by registered my to the president or secretary of the company
If no notice given to shareholders after that point, person requesting can set date and send notice.
When Shareholders Vote - Location
Corporations executive offices, unless bylaws specify other location, but may be held via internet
When Shareholders Vote - Notice
Time - shareholders must be given notice of either type of meeting no fewer than 7 days and no greater than 60 days prior to the meeting
Waiver - shareholder waives the notice either in writing or by showing up at the meeting and not protesting prior to the start of the meeting
When Shareholders Vote - Record Date
Who Can Vote - to determine which shareholders vote, the directors must fix a record date unless the articles provide for one
Time - record date cannot be earlier than date directors are meeting to set the date or more than 60 days before the shareholder meeting
NOTE - only holders of record ofshare as of that date can vote
Ex: Corp record date is 50 days before its annual meeting, 120 before meeting A sold stock to B, 40 days before meeting B to C, 10 days before C to D, D holds at time of meeting
B is only entitled to vote
When Shareholders Vote - Unanimous COnsent
Shareholders can act by unanimous consent unless the bylaws take this right away
How Shareholders Vote, On What - Vote on?
General - election of directors, fundamental changes proposed by the directors, and any other issues submitted for a vote by the directors
Fundamental Changs - includes mergers, share excahnges, amendments to articles of incorporations, changes to economic or legal right of shareholders, dissolution, sale of substantial asset
How Shareholders Vote, On What - Shareholder Approval?
Quorum - unless bylaw specifies differently, shareholders present at the meeting constitute a quorum wheteher in person, proxy, or electronic communication
Cannot take formal action unless a quorum is present
Shareholder Proxies - need not be physically present; permitted to authorized another person (including director) to vote on behalf and done so by proxy and must be sent to secretary of corp before meeting
Voting Power - typically one share = one vote but a corporation may create clases of stock that have greater voting power
Necessary Vote - if voting on fundamental change, then default is 2/3 however some articles allow for majority vote
How Shareholders Vote, On What - Cumulative Voting
General - unless articles provide otherwise, shareholders in ohio are entitled to cumulate their votes for directors
How it Works - each shareholder given number of votes equal to number of shares multiplied by number of positions being voted on
Ex: A owns 30 shares, B owns 70, corp has three directors. A can put 30x3= 90 on one, B can put 70x3/3=70 on each.
Shareholder Inspection Rights
Rule - has right to inspect coprorations books and records or its list of shareholders for any proper purpose that is reasonably related to their interest as a share holder
Note - ohio is very generous when doing this
