The court cites precedent that asserts that business decisions should not be

The court cites precedent that asserts that business

This preview shows page 85 - 87 out of 101 pages.

The court cites precedent that asserts that business decisions should not be disturbed just because a defendant can make a reasonable case that the policy chosen by the company may not be the wisest policy available. Shareholders Common stock : what you purchase when you buy stocks of public company on some sort of stock exchange. 1 share = 1 vote. **Voting is most important right associated with stock ownership. Preferred stock : gives owners a preferential treatment (e.g., faster or more divided payments, preferred access to dividends). If company decides to not pay out dividends and save the money, it’s still a sound decision (as long as decisions not made in bad faith nor abuse of discretion). Treasury Stock : stock held by business entity but has not been issued. “Sitting in inventory.” Right to receive dividends Dividends are not mandatory. Usually found in shareholder agreements. Preemptive Rights Belong to current shareholders and apply to shareholder’s right to preemptively do something (like buying more stock). Very important for minority owners of a closely held business. Ability to buy more dividends when company is growing. This can lead to a dilution in ownership share. Preemptive rights helps to prevent dilution buying allowing them to buy more shares when business is expanding. Provisions. May not allow spouses to buy into stock. Selling stock to competitors. Right to Information Right to financial info and inner workings of company. Becomes much more important for small, closely held business. Request for info needs to be valid and reasonable in 4 ways: 1) Time: reasonable time frame.
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2) Place: confidentiality. 3) Scope: access to appropriate medium. 4) Purpose: for company profit or trying to find out if someone is having an illicit relationship you don’t approve of? Restricted Shares (Stock) Cannot vote or receive dividends. ***Case: Trump vs. Chang*** ***Requirements for shareholder to file a lawsuit*** Requires own stock at the time the issue occurred. Needs to continue owning stock throughout lawsuit process. Plaintiff shareholder has to post a bond for plaintiff’s expenses in the event the Defendant wins. Duty to represent corp fairly. Ask board of directors to help with problem first before going to court. Forms of lawsuit: 1. Derivative lawsuit 2. Direct lawsuit 11/24/15 (Tuesday): Chapter 27 - Notes 1 Going over Exam 2 Questions: 1) Which of the following is/are benefits of a contract of adhesion? ANSWER: They allow large companies to create uniformity in their contracts instead of individually negotiating with large numbers of people or business entities. Most common WRONG ANSWER: two or more of the above are true. They create a situation where one party may have virtually zero bargaining power.
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  • Spring '08
  • BREDESON
  • Law, State court

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