Shareholder Rights

Question 1

Derivative suits (definition)

Answer 1

suit brought by shareholder to enforce a corporate cause of action where the corp has not sued to protect its own rights

Always ask: could the corp have brought this suit?

Question 2

Derivative suit requirements

Answer 2

• Contemporaneous ownership (shareholder owned stock at time of act and throughout proceedings)
• Adequacy (shareholder can rep the corp’s interests)
• Demand (shareholder made written demand on corp - wait 90 days or direct rejection)

Note: recovery of successful suit goes to the coporation

Question 3

Who votes?

Answer 3

Record date owner votes
(recorded owner on cut-off date)

Question 4

Proxies

Answer 4

Voting by proxy is alowed

Proxies are revocable unless labeled irrevocable and coupled with interest

Question 5

Notice for meetings

Answer 5

Notice of time and place (and purpose if special meeting) to all shareholders between 10 and 60 days before meeting

If no notice, then any action at meeting is void

Question 6

Mechanics of voting

Answer 6

Quorum required (majority of all shares represented at start of meeting)

Votes in favor must exceed votes against

Question 7

Cumulative voting

Answer 7

Number of votes available under cumulative voting = the number of shares times number of director slots

Only available if expressly stated in articles

Question 8

Dividends

Answer 8

Common = last
Preferred = first
Participating = twice (once as preferred, once as common)
Cumulative = add (add up previous years)