liable.
VII.RIGHTS OF SHAREHOLDERS
A.VOTING RIGHTS
1.RIGHT TO VOTE IN GENERAL - shs may generally vote for the election and removal of dirs, to amend the articles or bylaws, and on major corporate action or fundamental changes.
a) Who May Vote - the right to vote is held by shs of record as of the record date;
b) Restrictions on Right - shares may be either voting or nonvoting, or have multiple votes per share.
2.SHAREHOLDER MEETINGS - generally, shs can act only at meetings duly called and noticed at which a quorum is present.
a) Compare - informal action - statutes permit sh action without a meeting if there is unanimous written consent of all shs entitled to vote.
3.SHAREHOLDER VOTING
a) Straight Voting - this system of voting allows one vote for each share held and applies to all matters other than director elections, which may be subject to cumulative voting. Certain fundamental changes (eg, merger) frequently require higher shareholder approval.
b) Cumulative Voting For Director - this system allows each share one vote for each director to be elected, and the votes may be cast all for one candidate or divided among candidates as the sh chooses, thereby helping minority shs to elect a dir. Cumulative voting may be mandatory or permissive.
4.VOTING BY PROXY - a proxy authorizes another person to vote a shareholder's shares. The proxy usually must be in writing, and its effective period is statutorily limited unless it is validly irrevocable.
a) Revocability - a proxy is normally revocable by the sh at any time, although it may be made irrevocable if expressly stated and coupled with an interest in the shares themselves. Absent written notice to the corp, the death or incapacity of a sh does NOT revoke a proxy. a sh may revoke a proxy by notifying the proxy holder, giving a new proxy to someone else, or by personally attending the meeting and voting.
b) Proxy Solicitation - almost all shs of publicly held corps vote by proxy. Solicitations of proxies are regulated by the Securities Exchanges Act of 1934 Section 14a, federal proxy rules and, in some cases, state law. Federal proxy rules apply to the solicitation of all proxies of registered securities, but NOT to nonmanagement solicitation of 10 or fewer shs. The term "solicitation" is broadly interpreted by the SEC to include any part of a plan leading to a formal solicitation, eg, inspection of shareholder list.
1) 1992 amendments - the SEC revised the proxy rules to make it easier for shs to communicate with each other. Significant changes include: a safe harbor for communications that don't involve solicitation of voting authority, relaxation of requirements involving broadcast of published communications, relaxed preliminary filing requirements for solicitations, and removing communications between shs concerning proxy voting from definition of "sol...
