Loading presentation...

Present Remotely

Send the link below via email or IM

Copy

Present to your audience

Start remote presentation

  • Invited audience members will follow you as you navigate and present
  • People invited to a presentation do not need a Prezi account
  • This link expires 10 minutes after you close the presentation
  • A maximum of 30 users can follow your presentation
  • Learn more about this feature in our knowledge base article

Do you really want to delete this prezi?

Neither you, nor the coeditors you shared it with will be able to recover it again.

DeleteCancel

CORPORATIONS - Officers, Directors and Shareholders

No description
by

Carol Janssen

on 27 November 2018

Comments (0)

Please log in to add your comment.

Report abuse

Transcript of CORPORATIONS - Officers, Directors and Shareholders

CORPORATIONS
Directors
Officers &
Shareholders

Shareholders have right to pro-rata share of assets upon liquidation.

Shareholder may petition the court for dissolution of the corporation for following reasons:
Board mishandling corporate assets.
Board deadlocked and irreparable injury will result.
Acts of directors are illegal, oppressive, or fraudulent.
Shareholders are deadlocked for two meetings and can’t elect directors.


DISSOLUTION RIGHTS

Shareholders can sue a third party on behalf of the corporation if the Directors fail or refuse to correct the wrong or injury.

Directors may refuse to take action because they might personally be liable.

Any damages recovered go to corporation’s treasury.


SHAREHOLDER DERIVATIVE SUITS

Shareholders can sue.
Directors do not have to declare if they have a rational basis for withholding a dividend
Often, profits are retained for expansion, research or upgrades.


FAILURE TO DECLARE DIVIDENDS

Shareholders may vote on resolutions - majority vote
Need a “super majority” (e.g., 67%) for important matters: sale of assets, etc..

SHAREHOLDER VOTING

Liable for negligent acts that breach the duty of care or duty of loyalty
Crimes and torts committed by individually and/or those committed by employees under their supervision.

LIABILITY OF DIRECTORS AND OFFICERS

As fiduciaries of the corporation, they owe to the corporation and shareholders:

Duty of Care :

Act in good faith/best interests of the corporation.
Make informed and reasonable decisions
Rely on competent consultants and experts
Exercise reasonable supervision


DUTIES OF OFFICERS
AND DIRECTORS
Participation
Inspect corporate books and records
Compensation - nominal sum
Indemnification or liability insurance


RIGHTS OF DIRECTORS

Shareholders can inspect books for a proper purpose.
But corporation can protect trade secrets, other confidential information.
Shareholder must have held a minimum number of shares for a minimum amount of time.


INSPECTION RIGHTS

Distribution of corporate profits or income.
Only as ordered by the Board.
Can be stock, cash, property, stock of other corporations.
State laws control the sources of revenues for dividends


DIVIDENDS

Required annually


Voting requirements and procedures are:

Quorum of shareholders owning more than 50% of shares must be present to conduct business;

Shareholders may appoint a proxy or enter into a voting trust agreement.


SHAREHOLDERS’ MEETINGS

Approving all fundamental changes to the corporation:
Amending articles of incorporation or bylaws.
Approval of mergers or acquisition.
Sale of all corporate assets or dissolution.
Shareholders also elect and remove the board of directors.


SHAREHOLDER POWERS

Ownership of shares = equitable ownership interest in a corporation.
No right to manage
Protected from personal liability - "corporate veil" of limited liability.


SHAREHOLDERS

No liability for the outcome of business decision that turned sour.
Court will not require directors or officers to manage “in hindsight.”
Applies if decision was reasonable, informed, made in good faith and in the best interests of the corporation.


THE BUSINESS JUDGMENT RULE


Business decisions are made at regularly scheduled or special board meetings.

Majority vote
Register dissent to avoid liability

BOARD MEETINGS

Duty of Loyalty
: subordination of personal interests to the welfare of the corporation.

No competition with Corporation
No taking of a “corporate opportunity”
No conflict of interests
No transaction that is detrimental to minority shareholders


DUTIES OF OFFICERS
AND DIRECTORS
Officers are employees

Hired and fired by Board of Directors

Fiduciary duty to Corp.



OFFICERS

Board of Directors governs.

Individual directors are
not
agents of corporation.

Board can act as a “super-agent” and bind the corporation.

A director can also be a shareholder, especially in closely-held corporations.


DIRECTORS

Shares are freely transferable
Exception: Closely held corporations
restricted by articles and noted on the stock certificate.
“right of first refusal” or preemptive rights.

TRANSFER OF SHARES


Common shareholder entitled to one vote per share.
Articles and by-laws can exclude or limit voting rights of certain classes of stock.

SHAREHOLDER VOTING

Number set forth in the articles of incorporation and limited by statute.
Directors are appointed at the first organizational meeting.
In closely held companies, directors are generally the incorporators and/or the shareholders.
One year term of office.
Director can be removed for cause (for failing to perform a required duty).


ELECTION OF DIRECTORS
Full transcript