Shareholder voting

Question 1

Voter

Answer 1

1. generally, the record shareholder on the record date has the right to vote
   i. record shareholder: person shown as the owner in the corporate records
   ii. record date: date that is set determining voter eligibility
2. note: creates an odd result that an owner as of the record date who sells before the meeting can vote, but the buyer (now the owner) cannot vote
3. exceptions:
   i. corporations do not vote treasury stock
   a. i.e. a corporation that re-acquires stock before the record date, becoming the owner of the treasury stock as of the record date, does not vote the treasury stock
   ii. death of shareholder after record date: executor votes the shares

Question 2

Proxies

Answer 2

1. proxy: a writing signed by record shareholder directed to secretary of corporation, authorizing a third party to vote the SH’s shares
   i. proxy can be sent by fax and e-mail
   ii. email can serve as signature
2. a proxy is an agency, must vote as stated on the proxy
3. a proxy is valid for 11 months unless stated otherwise
4. a proxy is revocable at any time
5. the only irrevocable proxy is an irrevocable proxy coupled with an interest
   i. requirements:
   a. proxy must state that it is irrevocable
   b. proxy holder must have some interest in the shares other than voting
   ii. any interest beyond a simple interest in voting the shares is sufficient: ex. ownership, an option to buy the shares, a pledge of the shares
   iii. ex. it S sells B her shares after the record date but before the annual meeting, and gives B an irrevocable proxy to vote the shares at the annual meeting, the proxy is irrevocable

Question 3

Voting trust

Answer 3

1. trust with a 10 year maximum duration
2. requires
   i. written trust agreement controlling how the shares will be voted
   ii. filing with the corporation
   iii. transfer of legal title of shares to the voting trustee
   iv. original shareholders receive trust certificates and retain all SH rights except for voting

Question 4

Vote pooling agreement

Answer 4

1. requirements: a signed and written contract between shareholders to vote a certain way
2. split of authority into whether voting agreements are specifically enforceable

Question 5

Shareholder action

Answer 5

1. shareholders have two ways to act
   i. unanimous signed written consent by holders of all voting shares (email okay).
   ii. voting at a meeting

Question 6

Shareholder meetings

Answer 6

1. meeting can occur anywhere, does not have to be in state of incorporation
2. types of meeting:
   i. annual meeting to elect directors
   a. shareholder can petition the court to compel a meeting if none held in 15 months

Question 7

Special meeting

Answer 7

a. called by: the board, the president, ≥10% SHs, or anyone else authorized in bylaws
b. if a SH calls a meeting to do something for which SHs have no power, the meeting is valid but the action is not (ex. remove officer)

Question 8

Notice of meeting

Answer 8

1. notice delivery:
   i. written notice to every shareholder entitled to vote (fax or e-mail are okay)
   ii. notice delivered 10-60 days before the meeting
2. contents of the notice:
   i. must state time and place of the meeting.
   ii. for special meetings, must also state purpose of the meeting
   a. cannot do anything at the meeting not listed in the purpose
3. consequences of failure to give proper notice to all shareholders:
   i. action taken at the meeting is void unless waiver by those not sent notice
   ii. waiver can be express (signed writing) or implied (attendance without objection)

Question 9

Meeting voting procedure

Answer 9

1. a quorum of a majority of outstanding voting shares is required
   i. quorum is determined by number of shares represented, not the number of SHs
   ii. note: shareholder quorum is not lost if people leave the meeting
2. an action is deemed approved if more votes cast in favor of the action than votes cast against the action
   i. i.e. if quorum is met, need more votes cast in favor than against to approve
   ii. articles may provide for a greater requirement

Question 10

Cumulative voting

Answer 10

1. cumulative voting can be specified instead of straight voting in the articles
2. for election of directors, gives small SHs a better chance
3. each voter gets shares x number of directorships up for election