Corporate Meetings and Stockholder Actions

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is typically required for a quorum in a meeting of directors or trustees?

All board members must be present

A simple majority of the shareholders

A two-thirds majority of the directors

A majority of the directors or trustees as specified in the articles of incorporation (correct)

What is necessary for the approval of corporate acts typically?

Unanimous consent from all members

Approval from external auditors

A majority vote of the quorum (correct)

A decision made by the CEO alone

What condition must be met for a director to participate remotely in a meeting?

They must notify their intent to participate at least five days beforehand (correct)

They must send their vote via email during the meeting

They must submit a written request for remote attendance

They must have a proxy submit their vote

When can a meeting be considered valid without notice to some directors?

If the missing directors ratify the actions taken later Signup and view all the answers

What action must a director take concerning voting on a related party transaction?

Abstain from voting on the matter Signup and view all the answers

Which of the following statements about proxies in board meetings is true?

Directors cannot act by proxy due to personal qualifications Signup and view all the answers

What is required for the election of officers within the board?

A majority vote of all board members Signup and view all the answers

What happens if a resolution passed in a meeting without a quorum?

It is considered invalid until ratified properly Signup and view all the answers

What is required for corporations to validly amend their articles of incorporation?

Majority vote of the board of directors and written consent of 2/3 of stockholders Signup and view all the answers

Which of the following is NOT a requisite for a valid meeting of stockholders or members?

Written minutes of all discussions Signup and view all the answers

In the absence of by-law provisions, who can call a meeting in a corporation?

A director, trustee, or an officer managing the corporation Signup and view all the answers

What action is valid even if not done in a formal meeting?

Unanimous agreement of stockholders/members Signup and view all the answers

What happens if no authorized person or the authorized person refuses to call a meeting?

The SEC may order the meeting to be called upon petition Signup and view all the answers

Which exception to the necessity of meetings allows directors to act without a formal meeting?

Close Corporations Signup and view all the answers

What is the minimum percentage of written consent required from members to amend the articles of a non-stock corporation?

2/3 written consent of members Signup and view all the answers

For a valid meeting, what does 'quorum' refer to?

A sufficient number of attendees required to conduct business Signup and view all the answers

What is the maximum duration for a voting trust agreement without a loan connection?

Five years Signup and view all the answers

What must be included in the documentation of a voting trust agreement?

Written and notarized statement specifying terms Signup and view all the answers

Which of the following is NOT a power/rights of voting trustees?

Ability to transfer shares during the trust period Signup and view all the answers

For a voting trust to be enforceable, what is required to be filed?

A certified copy with the corporation and SEC Signup and view all the answers

How can participation of members in a corporation be counted towards quorum?

Participation through remote communication is allowed Signup and view all the answers

What happens to the voting rights of shares transferred under a voting trust after the agreed period?

They revert to the stockholder unless renewed Signup and view all the answers

Which of the following is a prohibited scenario for a voting trust agreement?

Bypassing laws related to anti-competitive practices Signup and view all the answers

To vote for jointly-owned shares, what is required?

Consent of all co-owners Signup and view all the answers

What is required to ensure that a meeting of stockholders or members is properly convened?

All stockholders or members must be present or represented. Signup and view all the answers

Which of the following must be included in the minutes of the most recent regular meeting?

Record of all questions asked during the meeting. Signup and view all the answers

What does a financial report for the previous year require?

Financial statements certified according to the Code and SEC rules. Signup and view all the answers

What type of information is necessary for stock corporations regarding the members’ list?

Information about current stockholders and their voting rights. Signup and view all the answers

In a corporation's performance report, which aspect should be included?

A balanced report on the corporation’s performance and major changes. Signup and view all the answers

What does the compensation report for directors or trustees entail?

Details on compensation that follow the Code and SEC rules. Signup and view all the answers

Which of the following is true about disclosures on self-dealings?

Transactions involving directors with related parties must be disclosed. Signup and view all the answers

What profiles must be provided for directors seeking election or re-election?

Nominee profiles must feature qualifications, experience, and board roles. Signup and view all the answers

Who can call a special meeting for the removal of directors or trustees?

Stockholders holding a majority of the outstanding capital stock Signup and view all the answers

What is the requirement for the notice of a meeting according to Section 49?

It must be issued by an authorized person in written form Signup and view all the answers

What must the notice of a meeting include according to the requisites of notice?

Date, time, place, and agenda of the meeting Signup and view all the answers

Which of the following methods can be legally used to send meeting notices?

Email or other methods allowed by the SEC Signup and view all the answers

What happens if a meeting is called improperly according to Section 50?

Proceedings and transactions remain valid under certain conditions Signup and view all the answers

What is NOT a requirement for the notice of a meeting?

It must include the voting results from the last meeting Signup and view all the answers

According to Section 49, what type of waivers of notice are not allowed?

General waivers specified in the articles of incorporation Signup and view all the answers

Which of the following is an acceptable form of waiver according to Section 49?

Both A and B Signup and view all the answers

Who presides over meetings when the chairman is absent?

The president Signup and view all the answers

Which of the following constitutes indirect voting?

Voting through a proxy Signup and view all the answers

Under what condition can a secured creditor exercise voting rights?

If the stockholder-debtor voluntarily transfers them Signup and view all the answers

What is a primary requirement for the validity of a proxy?

The proxy must be signed and written Signup and view all the answers

What happens to continuing proxies after five years?

They become invalid Signup and view all the answers

Which statement about revocation of proxies is accurate?

Proxies can be revoked unless coupled with an interest Signup and view all the answers

What is required for a person to act as a temporary presiding officer?

They must be a stockholder/member Signup and view all the answers

How should proxies be submitted before a meeting?

They must be received within a reasonable time before the meeting Signup and view all the answers

Study Notes

Meetings of Stockholders/Members

In corporation law, stockholders or members can only act in properly convened and assembled meetings unless the law specifies otherwise.
A written consent by a majority of stockholders or members is not enough for actions requiring majority approval.

Exceptions to the Rule

Amending Articles of Incorporation (Sec. 15):
- Corporations can amend articles with a majority vote of the board of directors/trustees and written consent of stockholders holding at least 2/3 of the outstanding capital stock.
- For non-stock corporations, a majority vote of trustees and a 2/3 written consent of members is sufficient.
- No meeting is required.
Unanimous Agreement Outside a Formal Meeting:
- Corporations are bound by unanimous action or agreement of stockholders/members, even if not in a formal meeting.
Close Corporations (Sec. 100):
- Actions by directors of a close corporation without a meeting are valid unless by-laws state otherwise.
One-Person Corporations (Sec. 128):
- Meetings are not required.

Requisites for a Valid Meeting of Stockholders or Members

Proper Place: The meeting must be held in the correct location.
Proper Time: The meeting must occur on the stated date and time or within a reasonable period afterward.
Called by Proper Person: Only authorized individuals can call a meeting.
Previous Notice: Proper notice must be given in advance.
Quorum: A sufficient number of attendees is required.

Proper Person to Call a Meeting

As Specified in By-Laws: The person(s) named in the by-laws can call a meeting.
In the Absence of By-Law Provision: A director, trustee, or officer managing the corporation can call a meeting unless otherwise stated by law.
If No Authorized Person or Refusal to Call: The SEC may order a meeting, upon petition by a stockholder/member.

Proper Notice (Section 49)

A written notice must be sent to all stockholders or members of record within the period prescribed by law.
The notice may be sent through email or other SEC-approved methods.

Notice of Every Meeting Required (Section 50)

Notices must be sent using methods specified in by-laws.
The notice must include the time, place, and purpose of the meeting.

Rules on Waiver of Notice to Stockholders (Section 49)

General waivers of notice are not allowed in articles of incorporation or by-laws.
A stockholder or member may waive notice expressly or impliedly.
Attendance at the meeting constitutes a waiver unless the attendee objects to its validity at the start.

Effect of Failure to Comply with Meeting Requisites (Section 50)

If a meeting is improperly held or called, its proceedings and transactions are still valid if:
- The actions taken are within the corporation's powers.
- All stockholders or members are present or represented, and no one objects at the start that it was improperly called or convened.

Matters to Be Presented by the Board During the Regular Meeting of Stockholders or Members (Section 49)

Minutes of the Most Recent Regular Meeting (details about the most recent meeting):
- Description of voting and vote-counting procedures.
- Details on how stockholders or members could ask questions, including a record of questions and answers.

Summary and Reports (Page 4)

Summary of topics discussed and decisions made.
Voting results.
List of attendees.
Other issues as required in corporate governance for minority stockholders.
Member's list, or stock-holder information (for non-stock & stock companies)
Performance reports, detailed and balanced report on corporation's performance with changes
Financial report for previous year
- Financial statements signed and certified
- Adequate internal controls or risk management systems documentation
- Details of external audit fees
Dividend policy explanation for dividend payments/reasons for non-payment
Director or trustee profiles
- Includes qualifications, experience, service length,training, etc.
Attendance report (board, committee, stockholder meetings)
Appraisals and performance reports
Compensation report
Disclosures on self-dealings
Transactions involving directors/trustees with related parties
Nominee profiles
Information about directors seeking election or re-election

Agenda (Section 49)

Addition and inclusion of items by directors, trustees, stockholders or members.
Special meetings and agenda items.

Postponement of Meetings (Section 49)

Written notice with a reason for postponement sent 2 weeks before the date, unless by-laws, law, or regulations state otherwise.

Closing of Stock and Transfer Books (Section 49)

The stock and transfer book or membership book must be closed at least 20 days before regular meetings and 7 days before special meetings; only stockholders or members of record can attend and vote.

Right to Vote of Stockholders or Members (Section 49)

Votes can be cast in person, by proxy, or via remote communication or in absentia.

Quorum Requirements (Section 51)

Corporations may define quorum requirements in their by-laws (without a quorum no action is allowed).
For Stock Corporations: quorum is based on a number of outstanding voting stocks, excluding treasury shares (Section 173).
For Non-Stock Corporations: quorum is a majority of the registered members unless stated otherwise by by-laws or code.

Place of Meetings (Section 50)

Meetings must be held in the corporation's principal office or, if not practical, the city or municipality where the principal office is located.

Necessity of Meetings of Directors or Trustees

Directors/trustees manage the corporation's affairs as a group, not individually.
They can only exercise powers during lawful board meetings.

Requisites for a Valid Board Meeting

Meeting must involve directors/trustees assembled as a board in a lawful manner.
A quorum must be present.
Decisions require majority of the quorum, or a majority of the board in specific cases.
The meeting must follow the time, place, and manner specified in the by-laws.

Rules Regarding Quorum (Section 52)

Quorum is typically a majority of the directors/trustees (stated in articles of incorporation, unless otherwise stipulated by by-laws).

Approval of Corporate Acts (Section 52)

Approval generally requires a majority vote of the quorum, except as specified by the RCCP.

Election of Officers (Section 52)

Electing officers needs a majority vote of all board members.
Higher Quorum Requirements:
- The RCCP allows corporations to require a greater number of board members to constitute a quorum for business transactions.

Proxy and Constructive Presence in Board Meetings (Section 52)

No proxies allowed: directors/trustees cannot act by proxy.
Remote Participation: directors/trustees can participate remotely.

Notice of Every Meeting Required

A meeting without proper notice is invalid unless:
- The absent directors ratify, explicitly or implicitly.
- The rights of innocent third parties is acquired, so the corporation is estopped.
- Resolutions or actions are subsequently ratified.
A director or trustee can waive the notice requirement.

Recusal of a Director or Trustee (Section 52)

A director or trustee with a related interest in a party transaction must abstain from voting on that matter, and comply with Section 31 requirements.

Presiding Officer at Meetings (Section 53)

The officer designated by By-laws, Chairperson, or President is the presiding officer. A temporary officer will preside if the Chairperson/President is absent.

Manner of Voting/Voting for Stockholders or Members

Direct Voting: Voting in person.
Indirect Voting: Voting through representatives (like executors/administrators), via proxy, or trustee voting trust agreements.

Representative Voting (Section 54)

Legal Representatives: Allowed in place of stockholders to vote without written proxy (executors, administrators, or court-appointed representatives).
Secured Creditors (Shares as Security): The stockholder/debtor retains voting rights unless transferred to the creditor. This transfer must be recorded in corporate books.
Corporation-Owned Shares: Shares are voted by its officer, agent, or proxy, as defined by bylaws or board.
Proxy Voting: Stockholder/member grants a proxy to vote on one's behalf; the proxy is the instrument evidencing the authority.

Requisites for Validity of Proxies (Section 57)

Proxies must be written, signed, submitted to by-laws, and received by the corporate secretary before the scheduled meeting.
Proxies are generally revocable, except if coupled with interest.
Proxies are valid for the specific meeting stated, otherwise, they expire after 5 years.

Voting Through Remote Communication or In Absentia (Section 57)

Authorization required by by-laws or a majority vote of the board.
Votes received before the tally concludes.
Remote presence counts toward quorum.
Proper procedures are required to comply.

Voting Trusts (Section 58)

A written agreement between stockholders transferring shares to a trustee. The trustee is granted voting and related rights for a period of 5 years.

Voting for Jointly Owned Shares (Section 55)

Consent of all co-owners required for voting unless exceptions are stipulated.

Voting Rights for Treasury Shares (Section 56)

Treasury shares held in the treasury have no voting rights and are ineligible for dividends.
Preventing directors from using shares to circumvent majority stockholder wishes.
Upon reissue Treasury shares regain their original voting and dividend rights.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers the rules and exceptions regarding stockholder and member meetings in corporation law. It details the necessary procedures for actions requiring majority approval and discusses specific exceptions like amending articles of incorporation and unanimous agreements. Test your understanding of these crucial aspects of corporate governance.