Board of Directors
BOD Meetings
BOD Voting
BOD Duties
Stock
100

What does the board of directors do?

Manage and direct the management of the corporation's buisness and affairs
100

May a director recieve compensation for serving as a director?

Yes

100

What must be present for a directors acts at a meeting to be valid?

A quorum must be present at the meeting

100

What two duties do a director owe a corporation? How does a director discharge such duty?

A duty of care and a duty of loyalty. 

- by acting in good faith and in a manner the director reasonably believes to be in the best interest of the corporation

100

What are the two kinds of stock, a corporation must have

Entitles one to vote on matters of corporate governance and stock that represent the basic ownership interest in a corporation


Both = common stock 

Stock having preference over other stock in regards to distribution is referred to as preferred stock. 

200

How does a Director get selected?

Shareholders elect directors at an annual shareholder meeting and be elected by straight or cumulative voting and by one or more classes of stock.

200

When can a regular meeting allowed to be held? Must notice be given?

May be held without notice of the date, time, place, or purpose of the meeting. 

200

What constitutes a quorum?

Unless spoken to by the articles or bylaws, a majority of directors in office constitutes a quorum at the time that the vote is taken

200

What is the business judgment rule?

The business judgment rule is a rebuttable presumption that a director reasonably believed that his actions were in the corporation's best interest. A court generally will not interfere with the business judgment of a director without showing fraud, illegality, or conflict of interest.


200

Who or what authorizes stock?

The corporation or Articles

300

How long does a director serves? What is the exception? When does their term expire? 

A director serves for a one-year term except a director may serve for longer than one year if the terms are staggered.

- expires at the first annual meeting after the directors election.

300

When can a special meeting allowed to be held? Must notice be given? What is not required in the notice?

A director is entitled to two days' notice of the date, time, and place of a special meeting. The purpose of the meeting is not required. 

300

What is a voting agreement and is it enforceable?

An agreement between directors as to how to vote is unenforceable

300

How can one overcome the business judgment rule?

by showing the director:

-did not act in good faith

- was not informed to the extent that the director reasonably believed necessary

- failed to timely investigate a matter of significant material concern

300

What is a stock subscription? Is it revocable?

Prior to incorporation, persons may subscribe to purchase stock from the corporation when it comes into existence

A pre-incorporation subscription is irrevocable for six months from the date of subscription but can be revoked if all subscribers agree to it.

400

Who, Why and How can a Director be removed?

Shareholders have the inherent power to remove a director 

Directors may only be removed for cause based on substantial grounds, such as a breach of a fiduciary duty, fraud, or criminal conduct. 

A directive may be removed only at a meeting called for the purpose of removing the director and the meeting notice must state that removal is at least one of the purposes of the meeting

400

Can a director waive notice, if so, how?

- any time by signed written waiver

- attending the meeting and not promptly objecting to lack of notice

400

May director vote by proxy?

No

400

How does a director breach the duty of loyalty?

by placing their own interest before those of the corporation

400

What is a distribution?

the transfer of cash or other property from a corporation to one or more of its shareholders.
500

What is the right to inspect? Can a director seek a court order to enforce this right?

A director is entitled to inspect and copy corporate books, records, and other documents for any purpose related to the performance of his duty to his director. 

- Yes

500

May a BOD act without holding a meeting?

Yes, by unanimous written consent 

500

What does upsurping a corporate opportunity mean?

A director violates his duty of loyalty by taking a corporate opportunity rather than first offering the opportunity to the corporation

500

What is a the safe harbor rule? And what are the safe harbor rules

A BOD conflicts of interest transaction may still be protected if: 

- disclosure of all material facts to BOD or shareholders 

approval by a majority of BOD or shareholders without conflicting interests

AND fairness of the transaction to the corp at the time of commencement.

500

Who has the power to authorize distribution? When can a shareholder compel the BOD to authorize a distribution?

BOD

When the BOD acts in bad faith and abuses its discretion by refusing to declare a distribution. 

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