Key Terms
Director
Person appointed or elected to sit on the board; manages the business and supervises officers.
Board of Directors
The collective body of directors.
Officers
Responsible for daily operations. Titles include president, COO, CFO, controller.
Proper purpose
One that protects the interests of BOTH the corporation AND the shareholder. The inspection cannot work against the corp
Meeting frequency
At least annually. Special meetings may be called for:
Quorum
Minimum number of shareholders (usually a majority) who must be present to conduct a vote. Defined by the corporation's
Proxy
A person authorized to vote on another shareholder's stock shares. Used when a shareholder cannot attend physically.
Common stock
Shareholders generally get ONE vote per share owned.
Preferred stock
Owners often DO NOT have voting rights. Trade-off is higher dividends or preference in receiving dividends.
Preemptive right
A shareholder's privilege to buy newly issued stock BEFORE shares are offered to the public.
Purpose
Prevents shareholders from using a corporation to do what they could not do directly themselves.
Amount
Shareholders may buy shares proportionate to their current holdings.
Time limit
Must be exercised within 30 to 60 days of being offered.
Why the deadline exists
Allows the corporation to complete the sale to existing shareholders before offering remaining shares to the public.
Derivative suit
A lawsuit brought by a shareholder ON THE CORPORATION'S BEHALF against a third party, because the corporation itself fai