Shareholders & Board of Directors

Question 1

Annual Meeting Requirement

Answer 1

hold once a year, primary purpose is to elect D

Question 2

Special Meeting Requirement

Answer 2

may be called any shareholder or D that own 10% of voting shares

Question 3

Will a failure to hold a meeting put the company at stake?

Answer 3

no

Question 4

What is notice requirement for a meeting?

Answer 4

voting SH must be notified of time, date, place, in a timely manner no less than 10 days and no more than 60 before meeting

Question 5

What occurs with unanimous written consent?

Answer 5

SH can take any action that would have occurred at a meeting with unanimous written consent

Question 6

What is eligibility to vote

Answer 6

only record owners of voting stock permitted to vote must be owner of record stock at the close of the business on the record date

C generally cant vote on its own stock

Question 7

Quorum requirements

Answer 7

majority of the Votes entitled to be cast on a matter

Question 8

What is cumulative voting

Answer 8

SH can cumulate votes to allow minority SH to elect representatives t D

Question 9

proxy voting

Answer 9

someone votes on behalf of SH, permitted if notice given and delivered to C or agent

Question 10

Voting Pool

Answer 10

when SH cote with other SH, a binding agreement SH retain ownership

doesnt need to be filled with C and there is no time limit

Question 11

Voting Trust

Answer 11

trust where legal ownership of SH stock, trustee votes the shares and distributes in accord with the trust

must be in writing , limited to ten years, filled with C

Question 12

Management agreement

Answer 12

allows SH to alter the way the C is managed even if the agreement is inconsistent with statutory provisions

Question 13

Right to inspect records

Answer 13

SH have the right, need to show proper purpose (goes to their interest), inspect and copy corporate records upon 5 days written notice

Question 14

Direct Suit

Answer 14

action to enforce SH rights because Director breached a duty

or an action based on grounds unrelated to SH status

Question 15

Derivative actions

Answer 15

SH sues on behalf of C for harm suffered by C

Question 16

Standing for derivative actions

Answer 16

P must be a SH at the time of the wrong, and the time the action was filled, must continue to be SH during litigation, and fairly and adq. represents C interrest

Question 17

What are requirements for derivative actions

Answer 17

written demand on board of directors unless it would be futile (futile exception does not apply to RMBCA)

Question 18

What is standard if demand is rejected?

Answer 18

BJR

Question 19

can the plaintiff seek reimbursement from the C for reasonable litigation expenses

Answer 19

yes

Question 20

Can board missed derivative action?

Answer 20

qualified directors decide in good faith after reasonable inquiry that action is not in corporations best interest

Question 21

Piercing Corporate Viel

Answer 21

a avenue to hold sH liable

use TOC: whether C is being used as facade for dominant SH personal dealing andd whether there is unity of interest and ownership between the C and its members

Question 22

What factors to consider for piercing veil

Answer 22

undercapitalization, disregard of corporate formalities, using C’s assests as SH owns assests, self- dealing, siphoning funds, using corporate form to avoid statutory requirements

Question 23

What is controlling SH

Answer 23

someone who holds high enough % of ownership in company to enact changes at the highest level: 50

Question 24

When will controlling SH have fud. duty

Answer 24

if controlling SH is selling interest to an outsider seeking to eliminate another SH from C or receiving distribution that is denied to other SH

Question 25

What is duty to disclose

Answer 25

information that RP would consider important in deciding how to vote on transactiion and a duty of fair dealing when purchasing minoirty SH intestest

Question 26

Requirements

Answer 26

D must be a natural person, can have one or ore, selected at annual SH meeting

Question 27

term

Answer 27

typically one year but may serve longer

can be removed by SH with or without cause, D may also resign at any time with written ntoice to DB, chair, or C

Question 28

Meeting requirements

Answer 28

two days notice: date, time, place, purpose for special meetings

regular meetings can be held without notice

they may also act by unanimous written consent

Question 29

Voting Requirements

Answer 29

asset of a majority of D present is necessary for board approval
- to be valid act, a quorum must have been present
- majority of all D’s in office constitutes quorum

Question 30

Are pooling agreements permitted

Answer 30

no niether is proxy

Question 31

Scope of Duty Care

Answer 31

D duty to act with care that a person in like position would reasonably believe appropriate under similar circumstances (objective Standard)

Question 32

What is reliance protection?

Answer 32

D can rely on information and opinions of others D, experts, attorney, or committee if D reasonably believes them to be reliable

Question 33

BJR

Answer 33

rebuttable presumption that D reasonably belived his action were in the best interest of C

Question 34

When does BJR not apply?

Answer 34

when D engages in conflict of interest transaction with C

Question 35

how to overcome BJR?

Answer 35

must be shown that D did not act in good faith; D was not informed to the extent he reasonably believed was necessary, D had material interest in challenged conduct, D failed to deovte attention to C affairs, D failed to timely investigate

Question 36

Duty of loayty

Answer 36

breach if D self deals, ursurp oportunity

Question 37

Indemnity

Answer 37

C is required to indemnify D for any reasonable expenses incurred in successful defense of proceeding against D

C cant indemnify D against liability due to reciept of improper personal benefit

C may do it is unsuccesful defense if D acted in good faith with a reasonable belief that the conduct was C best interest

Question 38

Does D have right to inspect records?

Answer 38

Yes

Question 39

Safe Harbor Requirements

Answer 39

majority directors informed about material facts, majority of directors are disinterested shareholder and fairness of transaction