Notes- Chapter 39

Notes- Chapter 39 - Chapter 39- Corporations- Directors,...

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Chapter 39- Corporations- Directors, Officers, and Shareholders Roles of Directors and Officers Election of directors - Usually serves for a term of one year - Incorporators usually appoint the first board - Removal of Directors o Can be removed for cause (failing to perform a required duty) - Vacancies on the Board of Directors o Either the shareholders or the board can fill in the empty positions Compensation of Directors - RMBCA states that unless the bylaws provide otherwise, the board may set up their own compensation - Directors can also get stock options - Inside director- a director who is also an officer of the corporation - Outside director- a director who doesn’t hold a management position Board of Directors’ Meetings - Quorum- a minimum number of members that must be present for a business to be validly transacted (usually not less than one-third of the directors) o Sometimes the bylaws specify a greater number of members that must be at the meeting - Ordinary matters usually only require simple majority; certain extraordinary issues may require a greater- than-majority Rights of directors - Right to participation (entitled to participate in the meetings) - Right of inspection (each director can access the corporation’s books and records, facilities, and premises) - Right to indemnification (reimbursement for legal costs. .etc when involved in litigation) Committees of the Board of Directors 1) Executive committee a. Limited to making management decisions b. Cannot declare dividends, authorize issuance of stocks, or anything that requires shareholder approval 2) Audit Committee a. Responsible for the selection, compensation, and oversight of independent public accountants 3) Nominating Committee a. Chooses the candidates for the board of directors that management wishes to submit to the shareholders in the next election. 4) Compensation Committee
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Notes- Chapter 39 - Chapter 39- Corporations- Directors,...

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