STOCKHOLDERS AND MEMBERS Flashcards
Three (3) ways by which a person may be a
stockholder:
Contract of subscription with the
corporation;
1.
Purchase of treasury shares from the
corporation; and
2.
Purchase or acquisition of shares from
existing stockholders.
3.
proxy
the authority given by the
stockholder or member to another to
vote for him at a stockholders‘ or
members‘ meeting.
Voting Trust
an agreement
whereby one or more stockholders of a
stock corporations may create a voting
trust for the purpose of conferring upon
a trustee or trustees the right to vote
and other rights pertaining to the shares
for a period not exceeding 5 years at
any one time.
PROPRIETARY RIGHTS
- Right to dividends
- Right of appraisal
- Right to inspect
- Pre-emptive right
- Right to vote
- Right of first refusal
Right of appraisal
It is the right of a stockholder who
dissents from certain corporate actions
to demand payment of the fair value of
his or her shares.
EFFECT OF APPRAISAL RIGHT
All rights accruing to the dissenting
stockholder‘s shares, including voting
and dividend rights, shall be suspended,
except the right of such stockholder to
receive payment of the fair value
thereof.
Pre-Emptive Right,
defined:
It is the preferential right granted to all
stockholders of a corporation to
subscribe to all issues or disposition of
shares of any class, in proportion to their
respective shareholdings
Right of first refusal:
It is the right granted to stockholders of
existing corporations to buy the shares
of stock of another stockholder at a fixed
price and only valid if made on
reasonable terms and consideration.
Disloyalty of a Director/Trustee
Acquisition of pecuniary interest in conflict with his
duty as director/trustee
Acquisition of interest adverse to the interest of the
corporation
Acquisition for himself a business opportunity which
should belong to the corporation
Business Judgement Rule
It provides that questions of policy or management are
left solely to the honest decision of officers and directors
of a corporation and the courts are without authority to
substitute their judgment for the judgment of the board
of directors.
Self-dealing directors, trustees, or officers
A contract of the corporation with one or more of its
directors or trustees or officers or their spouses and relatives
within the fourth civil degree of consanguinity or
affinity is voidable, at the option of such corporation.
Interlocking Director
When one (or some or all) of the directors in
one corporation is (or are) a director(s) in
another corporation.
CERTIFICATE OF STOCK
A piece of paper or document which
evidences the ownership of shares and a
convenient of instrument for the transfer of
title.
STOCK and TRANSFER BOOK
Is the registry of ownership in a
corporation. It is the quintessential record
of all stockholders and their corresponding
stockholdings in the corporation.
a. Issued without consideration (Bonus Share);
b. Issued as fully paid when the corporation has
received less sum of money than its par or issued
value (Discounted Shares);
c. Issued for consideration other than actual cash
(property or service), the fair valuation of which is
less than its par or issued value;
d. Issued as stock dividends when there are no
sufficient retained earnings or surplus to justify it.
WATERED STOCKS
MERGER
union effected by absorbing
one or more existing corporations by
another which survives and continues the
combined business.
CONSOLIDATION
the uniting or
amalgamation of two or more existing
corporations to form a new corporation.
