Key Terms
Director
A person appointed or elected to sit on a board that manages the business and supervises officers. Board of Directors: t
Quorum
The minimum number of shareholders (usually a majority) who must be present to conduct a vote. Defined by bylaws or stat
Proxy
A person authorized to vote on another shareholder's behalf. Used when a shareholder cannot attend in person.
Common stock
One vote per share. Holders typically vote on major corporate issues.
Preemptive right
The privilege to buy newly issued stock before it is offered to the public.
Purpose
Prevents dilution of existing ownership interests.
Amount
Proportionate to current holdings.
Deadline
Usually must be exercised within 30 to 60 days of being offered.
Derivative suit
A lawsuit brought by a shareholder ON THE CORPORATION'S BEHALF against a third party, because the corporation failed to
Most common target
Officers or directors who are not acting in the corporation's best interest.
Requirements to file
1. Shareholder must own shares AT THE TIME OF THE ALLEGED INJURY 2.
Dividend
A portion of corporate profits distributed to shareholders on a pro rata basis. Usually paid as cash or additional share
Two components of fiduciary duty
Duty of loyalty and duty of care.
Corporate Opportunity Doctrine
Prevents officers and directors from taking personal advantage of a business opportunity that properly belongs to the co
Example
If state law limits an individual to a certain number of liquor licenses, forming multiple corporations to get around th