10. What are the facts and outcome in the case of Guth v. Loft, Inc. and how does it apply to the duty of loyalty and good faith?
Charles Guth became the president of Loft, Inc., a Candyland restaurant chain. Guth also partly owned Grace Company, which created formulas of syrups used for soft drinks (Spamann, 2014). Loft, Inc. at the time, purchase its syrup from Coca-Cola company, however, Guth was dissatisfied with the price and decided to create a new formula with Roy Megargel (Clarkson, 2015, p. 785). This new formula was meant to create the trademark for Pepsi-Cola. While working for Loft, Inc., Guth used Loft’s credits, capital, employees and facilities to fund his new venture without Loft’s knowledge. Once Loft found out what Guth was …show more content…
Bylaws include corporate procedures and illustrate the powers of shareholders, officers and board of directors (Moran, 1994, p.443). Since bylaws do not have to be filed by the Secretary of State, they can be easily amended and enforced as soon as approval if passed by the board of directors (Sullivan, 2016). The first step to amending bylaws would be to conduct a meeting to inform the board of directors of the purpose, specific changes and procedures concerning the amending process (Sullivan, 2016). Next, the company’s existing bylaws need to be reviewed and voting percentages must be determined. In most cases, all board of directors have the right to vote, however, voting rights vary from company to company. Some agreements require a two-thirds majority while others may only require a minimal number of votes (Sullivan, 2016). Once the amendments are drafted, a copy of the changes, including the date of the vote must be distributed and all voting parties must properly review the documents. A second meeting will then be held to collect everyone’s vote. If the vote passes, a written resolution must be prepared reflecting the changes and minutes of the meeting (Sullivan, 2016). A copy of this document must be filed within the companies’ incorporation files and the changes should be officially written in the bylaws once the meeting …show more content…
If there is a will a personal representative, executor or trustee will be assigned to manage and administer the deceased shareholders estate (Streissguth, 2012). The personal representatives’ rights will be specified in the terms of the will. A will may also place certain restrictions on the transfer of shares that occur after the shareholders death. If a shareholder does not have a valid will, state laws will govern who will inherit the shares. The transfer procedure will begin in probate court once a personal representative is assigned authority to take over the distribution of assets (Streissguth, 2012). The representative will then use his/her authority to notify the brokerage that holds the certificate of stocks and the brokerage will provide the representative with the certificates and transfer of ownership forms (Streissguth, 2012). The representative will then bring the forms to the bank. The Securities and Exchange Commission requires that an executor provides a Medallion Signature Guarantee before transferring the ownership of the shares. Once the Medallion Guarantee is processed, the representative returns the documents to the bank and a transfer agent re-issues certificated under the name of the shareholders beneficiaries (Streissguth,
Charles Guth became the president of Loft, Inc., a Candyland restaurant chain. Guth also partly owned Grace Company, which created formulas of syrups used for soft drinks (Spamann, 2014). Loft, Inc. at the time, purchase its syrup from Coca-Cola company, however, Guth was dissatisfied with the price and decided to create a new formula with Roy Megargel (Clarkson, 2015, p. 785). This new formula was meant to create the trademark for Pepsi-Cola. While working for Loft, Inc., Guth used Loft’s credits, capital, employees and facilities to fund his new venture without Loft’s knowledge. Once Loft found out what Guth was …show more content…
Bylaws include corporate procedures and illustrate the powers of shareholders, officers and board of directors (Moran, 1994, p.443). Since bylaws do not have to be filed by the Secretary of State, they can be easily amended and enforced as soon as approval if passed by the board of directors (Sullivan, 2016). The first step to amending bylaws would be to conduct a meeting to inform the board of directors of the purpose, specific changes and procedures concerning the amending process (Sullivan, 2016). Next, the company’s existing bylaws need to be reviewed and voting percentages must be determined. In most cases, all board of directors have the right to vote, however, voting rights vary from company to company. Some agreements require a two-thirds majority while others may only require a minimal number of votes (Sullivan, 2016). Once the amendments are drafted, a copy of the changes, including the date of the vote must be distributed and all voting parties must properly review the documents. A second meeting will then be held to collect everyone’s vote. If the vote passes, a written resolution must be prepared reflecting the changes and minutes of the meeting (Sullivan, 2016). A copy of this document must be filed within the companies’ incorporation files and the changes should be officially written in the bylaws once the meeting …show more content…
If there is a will a personal representative, executor or trustee will be assigned to manage and administer the deceased shareholders estate (Streissguth, 2012). The personal representatives’ rights will be specified in the terms of the will. A will may also place certain restrictions on the transfer of shares that occur after the shareholders death. If a shareholder does not have a valid will, state laws will govern who will inherit the shares. The transfer procedure will begin in probate court once a personal representative is assigned authority to take over the distribution of assets (Streissguth, 2012). The representative will then use his/her authority to notify the brokerage that holds the certificate of stocks and the brokerage will provide the representative with the certificates and transfer of ownership forms (Streissguth, 2012). The representative will then bring the forms to the bank. The Securities and Exchange Commission requires that an executor provides a Medallion Signature Guarantee before transferring the ownership of the shares. Once the Medallion Guarantee is processed, the representative returns the documents to the bank and a transfer agent re-issues certificated under the name of the shareholders beneficiaries (Streissguth,