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Flashcards in Pg 25 Deck (16)
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1
Q

What is involved in the director’s right to inspect?

A

Directors that are acting in good faith to fulfil their fiduciary duty have a near absolute right of access to corporate and books and records.

2
Q

What would have to be involved in order for a director’s right of access to inspect corporate records to be denied?

A

He clearly improper purpose

3
Q

What are some examples of improper purposes that a director could have that would make it so that he couldn’t be given a right to inspect corporate records?

A

– personal gain
– self dealing
- director is an employee of the competitor
– wanting to blackmail someone

4
Q

What is the job of a director?

A
  • to set policies for the corporation
  • supervise the work of officers
  • do everything that is not reserved to the shareholders

Essentially they control the corporation

5
Q

How often do directors meet?

A

Usually monthly

6
Q

What are all of the things that a director is responsible for?

A
  • appoint, supervise, and remove corporate officers
    – determine corporate policy
    – oversee officers
    – determine officer compensation
    – give advice and assistance to the officers
    – monitor the company’s progress
    – deal with bankruptcy filings or decide to sue for corporate injuries
7
Q

What are the things that directors need shareholder approval for?

A

Anything that creates a fundamental change in the corporation’s business affairs:
– changing the articles of incorporation
– dissolving the corporation
– consolidation or merger
– sale or lease of all of the corporate assets
– creating a new kind of stock or adding additional stock

8
Q

What is the rule for the number of directors that are needed?

A

Different from state to state. Some require a minimum, some have an upper limit, but the modern trend is just one. The usual range is 3 to 21 with seven being the average

9
Q

What is the standard of care that applies to directors?

A

That of a reasonably prudent person in a similar position.

10
Q

Who does the duty of care apply to and who does the duty of loyalty apply to within a corporation?

A

– duty of care: only directors

– duty of loyalty: directors and officers

11
Q

What is a committee for with regard to directors?

A

It is used to deal with issues more in depth. I.e.: executive committees meet between meetings with just a few inside directors.

  • compensation committee: can approve or recommend salary agreements for senior management
  • audit committee: can deal with independent auditors
  • nominating committee: can recommend candidates for election to the board
12
Q

How do directors act together as a board?

A

Official decisions get made at official meetings through everyone acting together collectively

13
Q

How are directors considered to be fiduciaries?

A

They have a duty to put the interests and advancement of the corporation before their own personal interests.

14
Q

Where do you find the requirements to become a director?

A

Usually in the articles of incorporation or the bylaws.

15
Q

What is the requirement for a board meeting?

A
  • there must be a quorum
  • all directors must have been properly notified of the meeting a reasonable time beforehand, and if they aren’t, then anything that happens at the meeting is invalid
  • extraordinary business must be specified in the notice
16
Q

Can shareholders remove a director?

A

Yes