Chapter 26 Outline - 39ppt

Chapter 26 Outline - 39ppt - CHAPTER 26 OUTLINE I. ROLES OF...

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C HAPTER 26 O UTLINE I. ROLES OF DIRECTORS AND OFFICERS The board of directors governs a corporation. Officers handle daily business. A. M ANAGEMENT R ESPONSIBILITIES These include major policy and financial decisions; appointment, supervision, pay, and  removal of officers and other managerial employees. B. E LECTION OF D IRECTORS 1. Number of Directors Set   in   a   corporation’s   articles   or   bylaws.   Corporations   with   fewer   than   fifty  shareholders can eliminate the board of directors. 2. How Directors Are Chosen The first board (appointed by the incorporators or named in the arti T cles) serves until  the   first   shareholders’  meeting.   Shareholders   by  majority   vote   (see  below)  elect  subsequent directors. 3. Removal of Directors Shareholder action can remove a director for cause (or the board may have the  power).   In   most   states,   a   director   cannot   be   removed   without   cause,   unless  shareholders have reserved the right. C. C OMPENSATION OF D IRECTORS Nominal sums may be paid to directors, and there is a trend to provide more. Directors  may set their own compensation [RMBCA 8.11]. A director who is also a corporate officer  is an inside director. A director who does not hold a management position is an outside  director. D. B OARD OF D IRECTORS ’ M EETINGS 1. Formal Minutes and Notice A board conducts business by holding formal meetings with recorded minutes. The  dates for regular meetings are usually set in the articles and bylaws or by board  resolution, and no other notice is re r quired. Telephone or e-conferencing is possible  [RMBCA 8.20]. 2. Quorum Requirements and Voting Quorum requirements vary. If the firm specifies none, in most states a quorum is a  majority of the number of directors authorized in the arti m cles or bylaws [RMBCA  8.24]. Voting is done in person, one vote per director.
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E. R IGHTS OF D IRECTORS 1. Participation A director has a right to participate in corporate business. Special meetings require  notice to all directors [RMBCA 8.23]. 2. Inspection A director has a right of inspection, which means access to all corpo A rate books and  records to make decisions. 3. Indemnification Most   states  permit   a   corporation   to   indemnify   a  director  for  costs   and  fees  in  defending against corporate-related law d suits. Many firms buy insurance to cover  indemnification [RMBCA 8.51]. F.
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Chapter 26 Outline - 39ppt - CHAPTER 26 OUTLINE I. ROLES OF...

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