Shareholders Flashcards
Shareholder Right to Vote
Only shareholders that are registered shareholders on record date are entitled to vote at a shareholders meeting.
Record Date
Bylaws may fix or provide record date, but it cannot exceed 70 days prior to shareholder meeting
Voting Proxy
A shareholder may vote her shares at a shareholder meeting without physically attending the meeting through use of a proxy.
Valid Voting Proxy
A valid proxy must be signed on:
1) an appointment form, or
2) an electronic transmission
must be accepted on face if no reasonable grounds to deny
only valid for 11 months
Proxy Voting Power
An individual who is given power to vote shares by proxy must act in accordance with an agreement between the parties.
Proxy Revocation
Proxy agreements are freely rervocable by the shareholder even if the proxy states that it is irrevocable.
Unless proxy coupled with an interest or legal right
Proxy Coupled with Interest
Under RMBCA, a proxy coupled with an interest include:
1) a pledge (person who lends money and accepts a pledge for loan)
2) a person who purchased or agreed to purchase shares
3) creditor of corp that extended credit
4) employee of corpo whose employment contract requires appointment
5) a party to a voting agreement
Unqualified Right to Inspect
A shareholder has an unqualified right to inspect and copy:
1) Articles of Incorporation
2) Bylaws
3) Resolutions by the BOD re class of shares
4) Shareholder Meeting Minutes from past 3 years
5) written communications sent to shareholders
6) names/address of directors and officers
7) most recent annual report
5 day notice
Right to Inspect for Proper Purpose
A shareholder has the right to inspect and copy certain accounting records if:
1) the inspection is made during regular business hours/reasonable location
2) there is a 5-day written notice
3) demand made in good faith and for proper purpose
4) purpose is described with particularity
5) records are directly connected with purpose
Proper Purpose
A purpose reasonably relevant to the shareholder’s interest as a shareholder.
1) determining share value
2) determining whether corp engaged in illegal conduct
3) investigate wrongdoing/mismanagement
4) protect financial interest in corp
Good Faith for Inspection
Shareholder must present evidence to establish a credible basis to infer possible wrongdoing.
Fiduciary Duties of Shareholders
Generally do NOT owe fiduciary duties to fellow shareholders.
Close Corp Fiduciary Duties
Controlling shareholderrs in close-corp owe fiduciary duties of loyalty and good faith and fair dealing to minority shareholders.
