Shareholders Legal Forms

Various corporate shareholders agreements and forms including resolutions, authorizations and more.

Popular - The shareholders (also referred to in some states as stockholders) are the persons or other business entities who actually own the corporation. The corporation ownership is divided into shares of stock in the corporation. Each share may be sold to shareholders who are then issued a stock certificate that represents their ownership of a percentage of the corporation, represented by numbers of shares of stock. Many different levels and classes of stock ownership may be designated, including the two most prevalent: common and preferred. Each share of stock is, generally, provided one vote in shareholder decisions, although it is perfectly acceptable to provide for non-voting classes of stock.

Ownership of shares of stock in a corporation brings with it both benefits and responsibilities. The benefits stem from the right to a share of ownership in the assets of the corporation. The business profits of the corporation may also be shared with the shareholders in the form of dividends. The decision of the corporation to issue dividends on stock, however, is within the realm of the board of directors.

The main responsibility of the shareholders is to elect the directors of the corporation. The shareholders also have the authority to vote on extraordinary business actions of the corporation. These actions are generally limited to decisive activities of the corporation, such as the sale of all of the assets of the corporation, the merger of the corporation, or the dissolution of the corporation. Shareholders, finally, generally have the right to approve any amendments to the Articles of Incorporation. Shareholders’ authority to direct the business only comes from the right to undertake these few actions. Their power must also always be exercised as a group. An individual shareholder has no power to direct the management of the corporation in any way, other than to buy or sell shares of stock.

Corporate Shareholders Meetings

The main responsibility of the shareholders of a corporation is to elect the directors of the business. This election is conducted at the annual meeting of the shareholders that is held on the date, time, and place as specified in the corporate bylaws. In addition, specific corporate business at other times of the year may occasionally need shareholder approval.

For example, shareholders must vote on the dissolution of the corporation, on amendments to the Bylaws or Articles of Incorporation, and on any extraordinary business transactions, such as the sale of all of the assets of the corporation. For these purposes, a special meeting of the shareholders must be held.

The initial meeting of the shareholders also has a slightly different agenda. At this meeting, the shareholders approve and ratify the adoption of the corporate bylaws, and ratify the election or appointment of the initial board of directors who will serve until the first annual meeting of the shareholders. The shareholders also approve the election of the first officers of the corporation by the board of directors.

The following information should be covered and documented in the minutes of the first shareholders meeting:

  • Name of corporation
  • Date of meeting
  • Location of meeting
  • Officers present at meeting
  • Others present at meeting
  • Calling of meeting to order and quorum present
  • Shareholders present at meeting
  • Shareholders represented by proxy at meeting
  • Name of president acting at meeting
  • Name of secretary acting at meeting
  • Name of chairperson elected to preside over meeting
  • Proper notification of meeting
  • Notice sent and affidavit filed/or waivers filed
  • Reading of minutes of first directors meeting
  • Approval and ratification of minutes of first directors meeting
  • Approval and ratification of election of officers and directors
  • Approval and ratification of adoption of corporate bylaws
  • Any other business
  • Meeting adjourned
  • Dating and signing of minutes by secretary

Article © Nova Publishing Company, 2005

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