Shareholders Flashcards
Annual Meetings
Primary purpose is to elect directors
Shareholders can seek action to compel annual meeting if meeting not held within 6 months after the fiscal year or 15 months after the last meeting
Special Meetings
May be called by board of directors, or officers/shareholders authorized by articles or bylaws
Meetings: Notice
Written notice for annual and special meetings
Must include the time, date, and place of the meeting
Meeting must be no sooner than 10 days and no later than 60 days after receiving notice
Notice can be WAIVED if shareholder attends meeting anyway
Voting Entitlement
Typically, ownership of stock entitles a shareholder to vote
Voting: Voting Power
Default rule: shareholders get 1 vote per share of stock
Voting: Record Date
Owner of stock at the close of business on record date has right to vote
Record date can be no more than 70 days prior to meeting
Voting: Shareholder List
Corporation must prepare alphabetical list of shareholder names entitled to notice of shareholder meeting
Voting: Quorum Requirements
There must be a quorum of the shares that are eligible to vote
Established by a majority of the votes entitled to be cast on the matter
Voting: Approval Requirements
Usually a majority of shareholder votes are needed to approve a decision, but this can be adjusted in the articles
Majority approval is usually based on the number of votes cast (not the total number of votes eligible to be cast)
Each class of stock may have the right to vote on different decisions
Voting: Plurality Voting to Electing Directors
Nominee with the most votes wins
Voting: Cumulative Voting to Electing Directors
Each shareholder will multiply the number of shares they are voting times the number of directors to be elected (this is their total number of votes)
These votes may be cast for a single candidate or split among multiple candidates as the shareholder sees fit
Proxy Voting
Shareholder may vote in person or by proxy.
Proxy vote must be executed by a signed writing and delivered to the corporation or its agent
Valid for 11 months
Inspection of Records
Shareholder has right to inspect and copy corporate records
Inspection of Records: Requirements
(1) Written request made at least 5 days before inspection
(2) May only take place during regular business hours
(3) Right cannot be eliminated by articles or bylaws
Inspection of Records: Records that Require a Proper Purpose to Inspect
(1) Excerpts from board meetings and records
(2) Accounting records
(3) Other shareholder records
