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12 Cards in this Set
- Front
- Back
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rights of shareholders |
DO NOT have the Right or Obligation to manage day to day business of enterprise
right to information- under the Model Act, shareholders have the right to inspect and copy corp. minute book, acct. records, and shareholders lists.
Right to vote- corp. must have at least one class of stock with voting rights -shareholders may vote by proxy (sub) |
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shareholder proposals |
any shareholder for the past year has owned 1% or more, or $2,000 of stock can require one proposal be placed in the companys proxy statement to be voted on at meeting
small percentage of these proposals are passed, but their presence may cause directors to adopt them anyway |
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shareholder meetings |
publicly-traded company must hold an annual meeting of shareholders
BOD and shareholders owning at least 10% of the stock have the right to call special meetings as needed |
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election and removal of directors |
theory- shareholders have the right to elect and remove directors from office
reality- nominating committee from BOD chooses candidates, one for each opening. shareholders can approve or refuse to vote.
the only way shareholders can nominate their own candidates is through a complex and expensive process
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compensation |
BOD sets the CEOs salary, includes perks -usually get signing bonuses for extended contacts -stock options -even if CEO has done a poor job, he may receive an exorbitant severance pay. |
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fundamental corporate changes |
corp. must seek shareholder approval before undergoing any of the following fundamental changes
mergers sales of assets dissolution amendments to the charter amendments to the bylaws |
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right to dissent |
if a private corp. decides to undertake a fundamental change, the Model Act and many state laws require the company to buy back the stock of any shareholders who object to this decision |
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right to protection |
controlling shareholders have a fiduciary duty to the minority shareholders
minority shareholders have the right to overturn a transaction between the corp. and a controlling shareholder, unless transaction is fair to min. SH
controlling SH must include min. SH in any favorable arrangements that they make for their own stock
many states prohibit a company from expelling SH unless the firm pays a fair price foe the minority stock and the expulsion has a legit business purpose |
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Sarbanes-Oxley Act |
in response to corporate scandals, congress passed this in 2002
all members of the boards audit committee must be independent
at least 1 of these members must be a financial expert |
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NYSE and Nasaq Reforms |
response to scandals this est. a new role for independent directors at listed companies
ind. directors must comprise a majority of the board
they must meet regularly on their own without inside directors
only ind. directors can serve on compensation or nominating committees
audit committees must have at least 3 ind. directors who are financially literate |
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enforcing rights
Derivative lawsuits |
brought by Shareholders to remedy a wrong to the Corporation. proceeds of litigation go to corporation |
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Enforcing rights
direct lawsuits |
shareholders are permitted to sue the corp. directly only if their own rights have been harmed |
