BL-Chapt39 - Corporations – Directors, Officers, and...

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Unformatted text preview: Corporations – Directors, Officers, and Shareholders Chapter Introduction 39-1 Roles of Directors and Officers 39-1a Election of Directors 39-1b Compensation of Directors 39-1c Board of Directors' Meetings 39-1d Rights of Directors 39-1e Committees of the Board of Directors 39-1f Corporate Officers and Executives 39-2 Duties and Liabilities of Directors and Officers 39-2a Duty of Care 39-2b Duty of Loyalty 39-2c Conflicts of Interest 39-2d Liability of Directors and Officers 39-3 The Role of Shareholders 39-3a Shareholders' Powers 39-3b Shareholders' Meetings 39-3c Shareholder Voting 39-4 Rights of Shareholders 39-4a Stock Certificates 39-4b Preemptive Rights 39-4c Stock Warrants 39-4d Dividends 39-4e Inspection Rights 39-4f Transfer of Shares 39-4g Rights on Dissolution 39-4h The Shareholder's Derivative Suit 39-5 Liability of Shareholders 39-5a Watered Stock 39-5b Duties of Majority Shareholders Chapter Recap Page 1 of 27 Print Chapter 2010-8-30 http://atext.aplia.com/controller/ChapterPrint.aspx?isbn=0324655223&mod=0&ch=39... Chapter Introduction A corporation joins the efforts and resources of a large number of individuals for the purpose of producing greater returns than those persons could have obtained individually. Corporate directors, officers, and shareholders all play different roles within the corporate entity. Sometimes, actions that may benefit the corporation as a whole do not coincide with the separate interests of the individuals making up the corporation. In such situations, it is important to know the rights and duties of all participants in the corporate enterprise. This chapter focuses on these rights and duties and the ways in which conflicts among corporate participants are resolved. Page 2 of 27 Print Chapter 2010-8-30 http://atext.aplia.com/controller/ChapterPrint.aspx?isbn=0324655223&mod=0&ch=39... 39-1 39-1a Roles of Directors and Officers Exhibit 39–1. Directors' Management Responsibilities Election of Directors Removal of Directors The board of directors is the ultimate authority in every corporation. Directors have responsibility for all policymaking decisions necessary to the management of all corporate affairs. Just as shareholders cannot act individually to bind the corporation, the directors must act as a body in carrying out routine corporate business. The board selects and removes the corporate officers, determines the capital structure of the corporation, and declares dividends. Each director has one vote, and customarily the majority rules. The general areas of responsibility of the board of directors are shown in Exhibit 39–1. Directors are sometimes inappropriately characterized as agents because they act on behalf of the corporation. No individual director, however, can act as an agent to bind the corporation; and as a group, directors collectively control the corporation in a way that no agent is able to control a principal. In addition, although directors occupy positions of trust and control over the corporation, they are not able to control a principal....
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This note was uploaded on 10/12/2011 for the course ACCT 362 taught by Professor Mint during the Fall '11 term at CUNY Queens.

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BL-Chapt39 - Corporations – Directors, Officers, and...

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