Management (Directors & Officers) Flashcards
(27 cards)
BoD
Manages + directs nosiness & affairs of corp
BoD Election
Elected by SHs at annual meeting
BoD Removal
Sh can remove director with/without cause unless articles provide
If elected by particular stock class, can only be removed by that class
BoD Action
Takes action thru meeting/w/ unanimous written consent
BoD Meetings
2 days’ notice needed for special meetings unless waived in writing/by director attending
No notice needed for reg meeting
Directors can’t vote by proxy
BoD Quorum
Majority of all directors to be present unless articles/bylaws say otherwiseBo
BoD Voting
Presence: can attend electronically if can hear/speak
Required #: If quorum present, majority vote of directors in attendance if they are present when vote taken
No voting agreements allowed
Director Dissent
D may dissent to action to avoid liability:
D must object to meeting, ensure dissent is in minutes or file written dissent during or immediately after meeting
BoD Committees
BoaD can act thru committee, Sarbanes Oxley requires publicly traded corp to have independent audit committee
Board Compensation
BOD can set its own comp but excess may be waste of assets
Officers
Run daily business, elected + removed by BoD
Owe fiduciary duties of loyalty & care to corp
Actual Authority
Defined by corporate bylaws/BoD
Implied Authority
Perform tasks necessary to carry out officer’s duties by virtue of status/position as long as matter is w/I scope of ordinary business
Apparent Authority
If corporation holds officer out as having authority to bind corp to TPs
Duty of Care
Must act as prudent person in like circumstances, must use any special skills
(can rely on info of experts, employees etc)
Business Judgment Rule
Rebuttable presumption director/officer reasonably believed actions were in corp’s best interests
Good faith actions subject to BJR absent fraud/illegality/self-dealing
Overcoming BJR
- Fraud
- Illegality
- Self-Dealing
- Acted in bad faith
- Not informed enough
- Didn’t devote enough attention
- Any failure to act as reasonable director
Duty of Loyalty
Director/Officer must act in good faith & in manner he reasonably believes is in corp’s best interest
Conflict of Interest/Self-Dealing Rule
transaction b/w corp & director (or relatives) or business where director has an interest that would normally require board approval is a breach of duty of loyalty unless (1) ratified or (2) fair
Ratification (self-dealing)
disclosure of material facts & approval by majority of disinterested directors or majority of all disinterested SHs
Fair (self-dealing)
transaction fair to corp at time of transaction
Self-Dealing Remedies
damages to corp, transaction my be subject to recession or injunction
Corporate Opportunity: Rule
D/O can’t usurp corp opportunity unless she 1st notifies board & waits for board to accept/reject before seizing opportunity (interest or expectancy, line of business)
Usurpation Remedies
Damages, constructive trust, corp gets opportunity at cost
