Shareholders Flashcards
What is the impact on C if there is a failure to hold required SH meetings?
Does not affect C’s existence or invalidate C’s business
What is the primary purpose of the annual meeting?
Who can call a special meeting?
Primary purpose is to elect Ds
May be called by BD or SHs who own at least 10% of voting shares
How is the notice requirement met for meetings?
How can a SH waive the notice requirement?
Voting SHs must be notified of time/date/place in a timely manner no less than 10 days and no more than 60 days before the meeting
SH can waive notice either
-> in writing
OR
-> by attending the meeting
What is “unanimous written consent”?
SHs can take any action that could have been taken at a meeting by unanimous written consent.
How do shareholder resolutions work?
What can’t shareholder resolutions do? Is there an exception?
Can shareholder resolutions regulate political expenditures?
Shareholder resolutions are submitted for SH action at SH meeting
-> cannot bind C or BD UNLESS amending bylaws
-> can regulate political expenditures
Which shareholders are eligible to vote?
Is C able to vote?
Generally, only record owners of voting stock are permitted to vote
-> an owner of voting stock at the close of business on the record date has the right to vote
-> C generally cannot vote its own stock
What is the quorum requirements?
A majority of the votes entitled to be cast on a matter.
What is cumulative voting for Ds?
When more than one director is to be elected, corporations can allow shareholders to cumulate their votes and cast all those votes for only one (or more than one) of the candidates.
The effect of cumulative voting is to allow minority SHs to elect representatives to the board.
When is a proxy vote valid?
The proxy vote must be in writing and delivered to the C or its agent.
What are three ways to vote with other SHs?
How does each work? Are there requirements?
Voting pool
-> a binding voting agreement under which SHs retain legal ownership
-> does not need to be filed with the C
-> no time limit
Voting trust
-> a trust to which legal ownership of SH’s stock is transferred to the trust
-> the trustee votes the shares and distributes the dividends in accord with trust
-> must be in writing, limited to 10 years, and filed with the C
Management agreement
-> allows SHs to alter the way the C is managed even if the agreement is inconsistent with statutory provisions
What is a SH’s right to inspection of records?
A SH with a proper purpose (relates to SH’s interest) has the right to inspect and copy corporate records upon five days’ written notice.
What are the two types of shareholder suits?
Direct actions
Derivative actions
What is a direct action?
An action to enforce SH rights for breach of fiduciary duty by D or O,
OR
an action based on ground related to SH’s status
What is a derivative suit?
How does SH have standing in a derivative action?
SH sues on behalf of C for harm suffered by C.
Plaintiff
-> must have been a SH at the time of the wrong and at the time the action is filed,
-> must continue to be a SH during the litigation,
AND
-> must fairly and adequately represent Ce’s interests.
What is required by a shareholder for them to take action under a derivative action?
Is the exception recognized everywhere?
Under what standard is a rejection of a demand tested?
Written demand upon BD must be made UNLESS it would be futile.
-> no response within 90 days of demand grants SH right to derivative action
The futiliy exception is not recognized under the RMBCA
Rejection of a demand is tested against the business judgment rule.
