Term
| Management Control of Shareholders |
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Definition
Control is limited to voting at shareholder's meetings to elect directors. Also may vote to amend bylaws, approve shareholders resolutions or vote on extraordinary corporate matters. Meetings come at 2 times
-regular
-special |
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Term
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Definition
| Minimum number of persons, shares presented or directors who must be present at a meeting in order to lawfully transact business. Only need this number of people to vote. |
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Term
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Definition
Are responsible for oversight and responsibility, primarily for policy. They:
1) plan mergers and acquisitions
2) approve SEC filings
3) approve strategic plans as well as several other duties
-the # of directors is fixed in the corporate bylaws
-courts will not interfere with directors actions unless illegal conduct or fraud occurs |
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Term
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Definition
Director is disqualified from taking part in corporate action if they have a conflict of interest.
ex: corporation is planning to buy Director's own corporation. Director cannot act on merger. |
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Term
| Sarbanes Oxley 2002 (SOX) |
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Definition
| Prohibits all loans either directly or indirectly to directors and executive officers by their corporations. Exception is for consumer credit business |
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Term
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Definition
| Directors act in fiduciary capacity in dealing with the corporation |
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Term
| The Business Judgment Rule |
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Definition
Rule that allows management immunity from liability for corporate acts where there is reasonable indication director acted in good faith, with adequate information, having exercised reasonable care on behalf of corporation. Excuses liability or director.
Cannot be gross negligence |
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Term
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Definition
| Corporation will protect director as long as they acted in good faith of company. Found in articles of incorporation |
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Term
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Definition
Should be brought by corporation. If not, shareholder's may bring action to represent corporation (derivative suit)
Ordinary directors are removed by vote of the shareholders |
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Term
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Definition
Run the corporation. Act as agents of the corporations, grounded by agency law. They have more extensive fiduciary duties because of their interaction with corporation. Officers are liable for:
-secret profits
-diverting corporate opportunities
They are appointed by either BoD. or Shareholders and are limited to act only under duties prescribed to them.
Can bind company to contract - thats why they are agents |
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Term
| Responsible Corporate Officer Doctrine |
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Definition
Officers may be criminally liable under federal and state law for failure to prevent commission of a crime if they are the responsible corporate officers.
Ex: dumping sewage with knowledge of the violation, officer is personally liable |
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Term
| Officers signing Documents |
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Definition
| must sign name and officer position in corporation otherwise officer is personally liable for note signed. |
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Term
| Liability of Management to Third Parties |
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Definition
| Corporate veil gives shareholders limited liability. Management is not liable for economic consequences if made in good faith or poor decisions. Not liable for corporate obligations or debts. Corporate is civilly liable if one of its agents causes injury under scope of corporation |
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