Shareholders

Question 1

Derivative Suit

Answer 1

2 different methods Depending on JX (Marx v Akers)

1) Universal Demand- Everyone is required to give demand and have to give the board 90 days before commencing any action
2) NY and/or DE system- Must give a demand unless it is futile; if you give a demand you can’t later say the BOD is biased or corrupt

Question 2

Preemptive Rights

Answer 2

Right to purchase shares of stock in order to maintain their percentage ownership.

Question 3

Watered Stock

Answer 3

Stock that is sold below par value- the minimum issuance price.
-Where a D authorizes watered stock, he and the purchaser are liable to the corp for the lost value.