Shareholders Flashcards
Duties
Generally non, shareholder who owns more than majority of stock has same duties as directors and officers.
If majority shareholder acts for own benefits that damages minority shareholders = breach of duty and held for oppression
Rights of Shareholders
Voting, Inspection of Books and Records, Preemptive Rights, Dissenter’s Rights, Litigation Rights
Voting Rights
Right to Elect and Eject Board Members, Fundamental Corporate Changes
Voting Mechanics
Meeting - requires quorum at start, may be present physically, virtually or by written or electronic proxy.
No Meeting: permissible if unanimous written consent (some states allow almost unanimous consent)
Types of Voting
Pooling: Valid
Cumulative: some corporations allow shareholder to pool all their votes in all races and case them for a smaller number of directors.
Straight Voting: Who ever has most votes, not majority.
Rights to Inspect Books and Records
Cannot be taken away by articles. Corporation can charge reasonable fees.
Preemptive Rights
Right to acquire additional shares in order to maintain same ownership percentage (Prevent dilution)
Dissenter’s Rights
No vote on fudnamental corporate change and right to receive payment FMV of one’s share’s
Litigation Rights
Direct Actions - Shareholder may sue corporation/officer/director/controlling shareholder to enforce personal claims benefiting shareholder.
Derivative Claims: Shareholder sues on behalf of corporation. SHAREHOLDER MUST MAKE A DEMAND ON BOARD FIRST UNLESS FUTILE.
Suits for breach of fiduciary duties are brought this way.
