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July Exam - Corporations > Shareholders: Voting > Flashcards

Shareholders: Voting Flashcards

1
Q

Authorized Stock - Definition

A
  • # of shares corp may issue (set in the articles)
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2
Q

Issued Stock

A
  • number of shares corp has sold
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3
Q

Outstanding Stock

A
  • shares company issued but has not reacquired
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4
Q

Voting - Record SHs and Record Date

A
  • SHs of record on the record date may vote at the meeting
  • unless articles provide otherwise, each outstanding share is entitled to one vote
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5
Q

Record Date

A
  • fixed by board
  • can’t be more than 70 days before the meeting
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6
Q

Exceptions to General Rule Re Record Owner + Voting

A
  • treasury stock (corp is owner of stock as of record date -> no one votes this stock)
  • death of SH (executory can vote the shares)
  • voting by proxy
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7
Q

Proxy

A
  • a writing (fax and email are ok)
  • signed by record SH (email fine if sender can be id’ed)
  • directed to sec of corp
  • authorizing another to vote the shares
  • good for 11 months unless it says otherwise
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8
Q

Revocation of Proxy

A
  • generally revocable by SH
  • may be revoked by:
    -> SH attending the meeting to vote themselves
    -> in writing to corporate secretary
    -> subsequent appointment of another proxy
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9
Q

Irrevocable Proxies

A
  • irrevocable only if states it’s irrevocable + is coupled w/ an interest or given as security

Requires:
1) proxy says it’s irrevocable AND
2) proxy holder has some interest in shares other than voting

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10
Q

Statutory Proxy Control

A

Rules governing proxy solicitation provide that:
1) there must be full + fair disclosure of all material facts w/ regard to any management-submitted proposal upon which SHs vote
2) material misstatements, omissions, + fraud in connection w/ solicitation of proxies are prohibited AND
3) management must include certain SH proposals on issues other than election of dirs, + allow proponents to explain their position

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11
Q

SH Voting Trusts + Voting Agreements - Core Significance

A
  • both allow SHs to pool their voting power
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12
Q

Voting Trust - Basic Concept

A
  • written agreement of SHs under which all of the shares owned by the parties to the agreement are transferred to trustee, who votes the shares + distributes dividends in accordance w/ provisions of voting trust agreement
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13
Q

Requirements for Voting Trust

A
  • written trust agreement, controlling how shares will be voted
  • copy of the agreement (including names + addresses of beneficial owners of the trust) is given to the corp
  • legal title to the shares is transferred to the voting trustee AND
  • original SHs receive trust certs + retain all SH rights except for voting
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14
Q

Voting Agreement - Basic Concept

A
  • entered into by SHs
  • provides for how they’ll vote their shares
  • note that these are increasingly specifically enforceable
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15
Q

Voting Agreement - Requirements

A
  • agreement must be in writing + signed
  • need not be filed w/ corp
  • not subject to any time limit
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16
Q

Convening Meetings

A
  • SHs usually vote at meetings
  • OR can act by unanimous written (email fine) consent signed by holders of all voting shares
  • meeting need not be held in state of incorporation
17
Q

Kinds of SH Meetings

A
  • annual meetings
  • special meetings
18
Q

Annual Meetings

A
  • corporations MUST hold annual meetings
  • if annual meeting not held w/in earlier of 6 months after end of fiscal yr or 15 months after last annual meeting, SH can petition court to order one to be held
  • SHs usually elect dirs at these meetings
19
Q

Special Meetings

A

May be called by:
1) board of dirs
2) president
3) holders of at least 10% of outstanding shares OR
4) anyone authorized to do so in articles or bylaws

  • meeting must be for a proper SH purpose
  • can’t do anything at the special meeting except the stated purpose
20
Q

Meetings - Notice

A
  • SHs must be notified of meetings not fewer than 10 or more than 60 days before the meeting
  • notice must be in writing (fax or email fine) to every SH entitled to vote
  • may be waived in writing or by attendance
21
Q

Meetings - Contents of Notice

A
  • must state date, time + place of meeting
  • for special meetings, must state purpose of meeting
22
Q

Meetings - Consequences of Failure to Give Proper Notice

A
  • action take at meeting voidable, UNLESS those who weren’t sent notice waive the defect
  • waiver can be express (made at any time) or implied by attendance
23
Q

What do SHs generally get to vote on?

A
  • elect directors
  • remove directors
  • fundamental corporate changes
  • can also vote on other things if board asks for SH vote on other things
24
Q

Quorum

A
  • needed at meeting every time SHs vote
  • focuses on number of shares represented, not # of SHs
  • general rule: quorum = majority of outstanding shares entitled to vote (unless articles or bylaws require a greater #)
  • NOT lost if people leave the meeting
25
Q

Voting - In General

A
  • absent contrary provision in articles, one vote per share
    -> could have weighted or contingent voting in articles though
  • if quorum present, SHs generally deemed to have approved a matter if votes cast in favor exceed votes cast against (unless articles or bylaws require more)
26
Q

Specific Votes Usually Required for Certain Matters

A
  • plurality to elect a director (whoever gets most votes wins)
  • majority of shares entitled to vote for fundamental corporate change
  • majority of shares entitled to vote to remove director
  • majority of shares that actually vote on issue for other matters
27
Q

Cumulative Voting- General Concept

A
  • usually comes up only in close corps
  • gives smaller SHs better chance of electing someone to board
  • available only when SHs elect directors
  • not available if articles are silent about it
28
Q

Straight Voting

A
  • separate election for each seat on board being elected
  • each outstanding share gets one vote for each seat
  • candidate who gets more votes than another wins
29
Q

Mechanics of Cumulative Voting

A
  • one at-large election -> top finishers are elected to the board
  • to determine voting power, multiple SHs number of voting shares times number of directors to be elected -> total # can be divided among candidates in any manner SH wants, including casting all for same candidate
30
Q

Class Voting on Article Amendments

A
  • whenever an amendment to the articles of inc will affect only a particular class of stock, that class has a right to vote on the action even if the class otherwise doesn’t have voting rights
31
Q

SH Resolutions

A
  • as a general matter, SHs are permitted to submit resolutions or proposals for action at SH meetings
    -> ex: SHs may express views on corp matters through nonbinding resolutions
  • generally, SH resolutions that seek to bind corp or board should involve a proper subject for SH action, such as seeking an amendment to the bylaws

July Exam - Corporations (13 decks)

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