What Type Of Privileges Do Shareholders Have In A Corporation?
https://youtu.be/bw9a4vuoh84
Video Transcribed: Isaiah Brydie with Urban Legal coming at you again with another video. This video is going to be all on shareholders and their rights and their privileges in powers that they have in a corporation.
The first power that a shareholder has is a right to inspect corporate records. That’s going to be looking at assets, liabilities, revenue and profits that the corporation is making. A shareholder can inspect those documents, or those records by giving written notice, stating a proper purpose for the revival of those documents.
Proper purpose could layout your interest in the corporation and what you are wanting to review those documents for to make sure that the board of directors are holding up their fiduciary duties and things of that nature. They cannot be simply for speculative purposes. Another power that shareholders have is a voting power. This is a very substantial power to where shareholders are entitled to vote on certain things.
This usually happens aside from proxy voting, or voting by consent, written consent given to the corporation. This usually happens when there is a meeting. There are two types of meetings. The first type is the annual shareholder meeting.
This is a meeting where it’s usually held yearly, or otherwise set up by the bylaws, where all the shareholders get together and they get a rundown of how the corporation is doing, how it’s operating. There, they’re able to vote on things like the makeup of the board of directors.
Any substantial changes to the corporation. They get to vote to amend their certificate of incorporation, or to make changes to the bylaws. Which again would fall under substantial changes to the corporation, to the corporate structure.
Some of the other things that constitute substantial changes to the corporate structure are of course going to be the selling off of assets, or the liquidation of the corporation. Other things that could be considered outside of the general daily course of business of the corporation.
Again, like we said before, the general day-to-day management of the corporation falls with the board of directors. However, when you’re dealing with things outside of that, then you need voting from the shareholders, as well as mergers and acquisitions of the corporation. Of course, a merger, buying of another corporation or another business entity would be considered outside of the general scope of day-to-day operations of the corporation. That’s an annual meeting.
The second type of meeting is what’s called a special meeting. Where a special meeting could be called by the board of directors, because they want to do something. They need shareholder approval of that thing which they’re requesting.
The special meeting, you need certain things to be given to the shareholders such as notice. With a special meeting, you need a quorum. Actually with all the meetings you need what’s called a quorum, which is basically a majority of your shares that are entitled to vote.
Then with voting, all you need is a simple majority just generally, depending on what you’re voting on. A simple majority of all the shares entitled to vote. The next power is a very, very powerful power that shareholders have in a corporation. That’s their ability to bring derivative actions on behalf of the corporation. Now this is, again, on behalf of the corporation. You can think of it as a parent operating in the best interest of their child.
It’s the shareholder operating in the best interest of the corporation. Where their shareholder brings a 
suit on behalf of the corporation to enforce a corporations rights, or to prevent a wrongdoing being done to the corporation by the board of directors, or by a super majority shareholder, or some other instance of that action.
Then the last general power that a shareholder has is what’s called appraisal rights. Where basically a shareholder can ask that their interest in the corporation, their shares be appraised for their value.
This usually happens when a shareholder is thinking about selling off their shares or their interest in a corporation, so they can get an adequate valuation of their shares in that corporation. Again, thanks you guys for watching. Be sure to go ahead and reach out to us if you have any legal questions with our information below. You guys have a good day.
