Term
Who is the ultimate authority in every corporation?
What are the duties? |
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Definition
- The board of directors
- Select officers of the company
- Declare dividends
- Determine capital structure
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Term
| Explain how a director can be appointed, how long they serve, and how they're removed |
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Definition
- Directors are assigned by voting from the shareholders. The more shares, the more votes.
- Directors usually serve for one year.
- Most elect 1/3 of the board of directors every year for 3-year terms.
- Can be removed for cause (failing to perform a required duty)
- Even the board can remove a director subject to shareholder review.
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Term
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Definition
| A member of the board of directors that also holds a management position within the company. |
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Term
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Definition
| Director that does not hold a management position within the company. |
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Term
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Definition
| Constituted by the presence of the majority of the directors. This is the minimum number of members of a body of officials that must be present to business to be validly transacted. |
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Term
| 3 Rights of directors (explain) |
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Definition
- Right to participation - Directors have the right to participate in all meetings of the board and must be notified. Schedules are usually set and reminders are not given.
- Right of inspection - Directors have the right to inspect books, records, facilities, etc of the co.
- Right to Indemnification - When involved in litigation, they receive reimbursement for fees, legal costs, damages, etc.
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Term
| 5 main committees established for large boards of directors |
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Definition
- Executive Committee - Management decisions for normal business. Can't declare dividends, amend bylaws, issue shares, or any action requiring shareholder approval.
- Audit Committee - All companies must have one. They assign, oversee, and compensate accountants to audit the financials.
- Nominating Committee - Choose board candidates to present to shareholders
- Compensation Committee - Decides compensation, benefits, stock option of top executives and the directors.
- Litigation Committee - Decides whether to pursue shareholder requests to file a lawsuit against some party. They investigate.
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Term
| 2 fiduciary duties that directors and officers hold in a corporation |
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Definition
- Duty of Care- Act in all things wisely & w/ care
- Make informed and reasonable decisions
- Exercise reasonable supervision over officers and employees
- Dissenting directors - To vote against
- Business judgment rule - Won't be liable to corp for honest mistakes of bad judgment.
2. Duty of Loyalty - Faithful to one's obligations and duties within the company. Violation would include anything done that is knowingly not in the company's best interest.
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Term
| 3 things that must exist in business judgment rule for director not to be held liable. |
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Definition
- Took reasonable steps to be informed
- Had rational basis for decision
- No conflict of interest between director and corporation.
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Term
| How often must a shareholder meeting be held |
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Definition
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Term
| For how long can a proxy be designated for shareholder voting? |
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Definition
| for 11 months unless proxy agreement mandates a longer period. |
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Term
| Who has the ability to submit a proposal for a change in company policy to be included with the Board of Directors' proxy materials for meetings? |
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Definition
| Shareholders that own stock worth at least $1,000 |
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Term
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Definition
| Each shareholder is entitled to a total number of votes equal to the number of board members to be elected multiplied by the number of voting shares that the shareholder owns. |
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Term
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Definition
| Shareholder gives voting rights to a trustee for a specified period of time. The trustee votes on behalf of the shareholder. The shareholder gives the trustee the stock certificate to vote and received a voting trust certificate, thus maintaining rights other than voting, like collecting dividends. |
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