2016 April 11 Chapter 36.pdf

2016 April 11 Chapter 36.pdf - 1 Chapter 36 Management...

This preview shows page 1 out of 2 pages.

Unformatted text preview: 4/18/19 1 Chapter 36 Management structure of Corporations 2 Management structure • Shareholders (S/H) elect and remove the board of directors. They approve fundamental changes. • The board of directors chooses the CEO and sets his compensation. • The CEO hires the officers that run the day to day operations of the corporation. 3 Quorum and proxies • The minimum number necessary to be present at a meeting to transact business. • A proxy is an authorization to vote another’s shares at a S/H meeting. 4 Shareholder suits • Direct suit v. derivative suit • Direct suit: brought by a shareholder or a class of shareholders against the corporation based upon the ownership of shares. • Derivative suit: brought by a shareholder on behalf of the corporation to enforce a right belonging to the corporation. 5 Direct suit • A direct lawsuit is brought to enforce a claim that the shareholder has against the corporation based on her ownership of shares. • Examples of direct suits include shareholders actions to compel payment of dividends properly declared, to enforce the right to inspect books, etc. • If the plaintiff wins, the recovery goes to the plaintiff • 6 Derivative suit • Derivative suit is brought by the shareholder on behalf of the corporation. • The theory is that there is a right for the corporation that is not being enforced by those running the corporation. • If the suit is won the recovery goes to the corporation. 7 Invitation to be on the board of directors • Invitation to be on the board of directors of an organization or a corporations is an indication of the importance/significance of the person and their qualifications. • However, it is not only a status symbol. • Usually it is not a paid position or is minimally paid. 1 • Derivative suit is brought by the shareholder on behalf of the corporation. • The theory is that there is a right for the corporation that is not being enforced by those running the corporation. • If the suit is won the recovery goes to the corporation. 7 Invitation to be on the board of directors • Invitation to be on the board of directors of an organization or a corporations is an indication of the importance/significance of the person and their qualifications. • However, it is not only a status symbol. • Usually it is not a paid position or is minimally paid. • It takes time and energy to serve on the board. • If unable to serve diligently it would be wise to decline the invitation. Otherwise one is exposed to potential legal liability. 8 Business Judgment Rule • The business judgment rule precludes imposing liability on directors and officers for honest mistakes in judgment if they act with due care, in good faith, and in a manner reasonably believed to be in the best interest of the corporation. 4/18/19 2 ...
View Full Document

  • Fall '10
  • GLOVER
  • Corporation

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern