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Questions and Answers
What is the maximum period of imprisonment for an offense that can disqualify a person from being a director, trustee, or officer?
What is the maximum period of imprisonment for an offense that can disqualify a person from being a director, trustee, or officer?
What is the time frame within which the secretary or relevant officer must report the cessation of office for a director, trustee, or officer?
What is the time frame within which the secretary or relevant officer must report the cessation of office for a director, trustee, or officer?
Which of the following offenses would not lead to disqualification from being a director, trustee, or officer?
Which of the following offenses would not lead to disqualification from being a director, trustee, or officer?
Whose approval is necessary for the qualifications or disqualifications regarding directors, trustees, or officers in the context of good corporate governance?
Whose approval is necessary for the qualifications or disqualifications regarding directors, trustees, or officers in the context of good corporate governance?
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What constitutes a quorum for conducting an election, regardless of any contrary provisions in the articles of incorporation or bylaws?
What constitutes a quorum for conducting an election, regardless of any contrary provisions in the articles of incorporation or bylaws?
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What is the primary criterion for a person to be classified as an independent director?
What is the primary criterion for a person to be classified as an independent director?
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Which of the following must happen for independent directors to be validly elected?
Which of the following must happen for independent directors to be validly elected?
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What characteristics must a nominee for a director or trustee possess?
What characteristics must a nominee for a director or trustee possess?
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Under what conditions can stockholders or members vote through remote communication?
Under what conditions can stockholders or members vote through remote communication?
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What is required for a stockholder or member participating in a meeting via remote communication to be considered present?
What is required for a stockholder or member participating in a meeting via remote communication to be considered present?
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Study Notes
Independent Directors
- Independent directors are free from any business or relationship that could impair their judgment.
- They are elected by shareholders, who have the right to nominate candidates free from disqualification.
- Subject to rules regulating qualifications, disqualifications, voting, term limits, and maximum board memberships to ensure independence.
Election of Directors or Trustees
- Shareholders must be present or represented by proxy during elections for a valid quorum.
- Remote voting is permissible for shareholders, especially in publicly vested corporations.
- The Commission has the authority to issue notices for elections, including details like time, place, and presiding officer.
Disqualification of Directors, Trustees, or Officers
- Disqualification occurs if an individual has been convicted of certain offenses within five years prior to their election.
- Convictions include imprisonment exceeding six years, violations of relevant corporate codes, or administrative liabilities for fraud.
- Similar disqualifications may arise from judgments or administrative actions by foreign regulatory authorities.
Removal of Directors or Trustees
- Directors or trustees may be held liable for voting on illegal acts or for gross negligence and bad faith.
- Directors must not acquire interests adverse to corporate matters handled in confidence, risking personal liability for any profits gained.
Dealings of Directors, Trustees, or Officers
- Stockholders possess a preemptive right to subscribe to new share issuances, proportionate to their holdings, unless restricted by corporative bylaws.
- This right does not apply to shares mandated by law for public stock offerings.
Sale or Other Disposition of Assets
- Corporations can sell, lease, or dispose of assets with a majority vote from the board of directors or trustees.
- Major asset sales require authorization from shareholders or members representing at least two-thirds of the outstanding capital stock.
Amendment to Bylaws
- Amendments or repeals of bylaws require agreement from the majority of the board and capital stock or members.
- Stockholders may empower the board to amend bylaws, but this authority can be revoked by a majority vote.
Meetings
- Types of meetings include regular and special meetings for directors, trustees, stockholders, or members.
- Specific procedures and conditions for conducting meetings are outlined to maintain regulatory compliance.
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