Shareholders (Directors, Officers) Flashcards
Shareholder Control
NO DIRECT CONTROL = gen rule; SHs have no right to directly control day-to-day mgmt of corp (this power rests in the bd. of directors and normally delegated to officers of the corp)
INDIRECT CONTROL =
(1) SHs elect and may remove directors w/ and w/o cause;
(2) SHs may modify bylaws
(3) SHs must approve fundamental corporate changes
Who has the right to directly control day-to-day management of corporation?
Board of directors (and normally delegated to officers of the corp.)
Who may modify bylaws?
Shareholders
Who may elect and remove directors with and without cause?
Shareholders
Who must approve fundamental corporate changes?
Shareholders
Who has indirect control of the corporation?
Shareholders
INDIRECT CONTROL =
(1) SHs elect and may remove directors w/ and w/o cause;
(2) SHs may modify bylaws
(3) SHs must approve fundamental corporate changes
Shareholder Derivative Suits
A lawsuit started by a shareholder to enforce a corporate cause of action
Reqs for Standing:
(1) Contemporaneous stock ownership
(a) when cause of action arose; AND
(b) throughout the entire litigation
(2) Written demand to board + wait 90 DAYS, unless:
(a) notified of rejection; OR
(b) irreparable injury would result
What are the reqs for standing in a shareholder derivative suit?
Reqs for Standing:
(1) Contemporaneous stock ownership
(a) when cause of action arose; AND
(b) throughout the entire litigation
(2) Written demand to board + wait 90 DAYS, unless:
(a) notified of rejection; OR
(b) irreparable injury would result
Shareholder Voting Rights
each share = one vote (unless otherwise specificed in articles of inc.)
registered owner on record date = record date set by the bd and can be any day w/in the 70 day window before the meeting
Proxies = delegates a SH’s right to vote to another person
Record Date
record date set by the bd and can be any day w/in the 70 day window before the meeting
What are the requirements for a valid proxy?
delegates a SH’s right to vote to another person
Reqs for Valid Proxy:
(1) in writing
(2) signed by record order
(3) sent to the corporation’s sec’y
(4) authorizes vote = valid for 11 months (unless provided otherwise)
REVOCABLE unless
- conspicuously states irrevocable; AND
- coupled w/ an interest in the shares
When is a valid proxy irrevocable?
When it conspicuously states irrevocable; AND coupled w/ an interest in the shares
Shareholders’ Meetings
Annual meetings = every corp must have an annual meeting where at least one director position is up for election
Special Meeting (SH meeting)
Who can call = Bd of directors; other authorized persons; OR 10% of votes entitled to be cast at meeting
Purpose? = proposals, fundamental changes
Notice reqs = (10 day
Who can call special meetings?
Bd of directors;
other authorized persons; OR
10% of votes entitled to be cast at meeting
