Chapters 39 40 Part Bx - First Meeting of Shareholders...

First Meeting of Shareholders
1.Adopt Bylaws {establish structure of corporation &
stocks}
2.Shareholders appoint directors.
3.Directors appoint officers.
4.Novation of pre-incorporation contracts from
promoters to corporation.
5.Transfer subscription agreements to shares of
stock.

Directors
•
Directors govern the corporation by making policy.
•
Agency : individual directors are not agents of corporation; but
the board as a whole is a “ super-agen t ” that binds the
corporation.
•
Bylaws establish the number of directors & their responsibilities.
•
Appointed/reappointed at the Annual Meeting of the Shareholders.
•
Directors can be removed for cause.
• Establishes procedure if director dies or resigns or a new position
created.
•
Directors may or may not be compensated.

Directors
•
Must meet at least once a year in a
formal meeting following Roberts Rules.
•
One Director = One Vote.
•
There must be a Quorum to conduct
official business. A quorum is the
minimum number of members of an
assembly or society that must be
present at any of its meetings to make
the proceedings of that meeting valid.
•
Directors have the right to:
•
Participate in major corporate
decisions through meetings.
•
Inspect corporate books and records.
•
Duty to make informed decisions.

Officers
•
Officers are hired by the Board of
Directors {Qualifications are set in
the bylaws}.
•
Manage the day-to-day affairs of the
corporation. Officers are agents of
the corporation – can bind the
corporation to contracts.
•
One person can hold more than one
office and be both an officer and a
director.

Directors
& Officers
are
Fiduciarie
s
Duty of Care :
•
Duty to act in good faith.
•
Duty to make informed decisions.
•
Duty to exercise reasonable
supervision when delegating work.
Duty of Loyalty:
Directors and officers must subordinate
their self-interest to the interest of the
corporation. They may not :
•
Compete with the corporation.
•
Usurp a corporate opportunity.

Fiduciar
y Duties
•
Still, an Officer or Director may benefit
from her position if
1. Duty to disclose potential conflicts of
interest.
2. May not vote on transactions that may
personally benefit the director/officer.
3. Transaction can still be approved by
other disinterested directors
4. The transaction is fair & reasonable.
•
Not to use information that is not public to
make a profit trading securities.