Corporations Flashcards
______ are the investors and ultimate owners of a residuary interest in the corporation.
Shareholders
______ manage and direct the management of the corporation’s business and affairs and are responsible for major corporate decisions.
Directors
What stock is eligible to vote on corporate matters?
Outstanding stock
What is the name given to shares of stock issued to shareholders that remains in their possession?
Outstanding shares
Do shareholders have an enforceable right to dividends?
No
Unless the agreement provides otherwise, for what length of time is a pre-incorporation stock subscription agreement irrevocable?
Six months
What is important to keep in mind for the removal and replacement of directors?
A director who was elected by a particular voting class of stock can only be removed by that same class.
True or False: At least a majority of all shareholders eligible to vote on a merger must approve of it.
False
What does not directly affect the determination of the amount of a dividend?
The number of shareholders
What does a valid board action require?
A quorum to be present and a majority vote
What’s a quorum?
A majority of all directors in office constitutes a quorum, unless a higher or lower number is required by the articles of incorporation or bylaws.
Right to inspection
Shareholder has a right to inspect and copy corporate records upon 5 days’ written notice. Must demonstrate a proper purpose before inspecting certain records like financial statements of the corp, the accounting records of the corp, and excerpts from minutes of any meeting of the BOD. This inspection right is usually restricted to normal business hours at the corporation’s principal place of business.
Proper purpose
A proper purpose is one that related to the shareholder’s interest in the corporation
