Shareholders: Management and Control

Question 1

Shareholder annual meeting

Answer 1

A corporation must hold an annual meeting of shareholders that is stated or fixed in accordance with the bylaws.

Question 2

Shareholder special meeting

Answer 2

Any meeting besides the annual meeting. Special meetings can be called by:
1. persons authorized under the articles of incorporation
2. a demand from shareholders that accounts for at least 10% of the votes entitled to be cast at the meeting; OR
3. the board of directors for limited purposes

Question 3

Notice to shareholders of meetings

Answer 3

Generally, shareholders who are entitled to vote must be provided with notice of all annual or special meetings.

For special meetings, the nost must:
1. state the purpose of the meetingl; AND
2. be provided 10-60 days before the meeting commences

Question 4

Quorum

Answer 4

A quorum must be present in order for the shareholder to take action at a meeting.

Unless otherwise set forth in the articles of incorporation, a quorum exists when at least a majority of the shareholders entitled to vote are present

Question 5

Non-voting shares

Answer 5

The articles of incorporation may provide that holders of certain types of shares cannot vote unless specific conditions are satisfied.

Nonetheless, such shareholders are estill entitled to receive notice even though their shares have non-voting status.

Question 6

How are shareholders’ votes counted or weighed?

Answer 6

Equally, unless otherwise provided by law or the articles of incorporation.

Question 7

Record date

Shareholder voting

Answer 7

A shareholder is only entitled to vote if she acquired voting shares before a designated record date.

Generally, the record date may be designated in the bylaws no more than 70 days prior to the shareholder meeting.

Question 8

Cumulative voting

Answer 8

Cumulative voting is usually a more favorable method to represent the interests of minority shareholders.

In cumulative voting, voters cast as many votes as there are seats, but voters are not limited to giving only one vote to a candidate. Instead, they can put multiple votes on one or more candidates.

Question 9

Vote by proxy

Answer 9

Allows a shareholder to vote without physically attending the shareholder’s meeting by authorizing another person to vote her shares on her behalf.

A valid proxy must exist in the form of verifiable electronic transmission or a signed written appointment form

A proxy is freely revocable by the shareholder UNLESS the recipient has an economic interest in the shares.

Question 10

Shareholder right to inspect books and records

Answer 10

A shareholder possesses the right to inspect corporate books and records so long as the purpose for the inspection is proper.

To be proper, the purpose for the inspection must be reasonably related to a person’s interests as a shareholder.

A shareholder may inspect the articles of incorporation and bylaws without providing a proper purpose.

Question 11

Procedural requirements for shareholders to inspect books and records

Answer 11

Generally, a shareholder must:
1. make a written demand to inspect the corporate books and records and allow the corporation a reasonable amount of time to respond (usually 5 days); AND
2. Conduct the inspection during regular business hours at the corporation’s principal office