Uniform Bar Exam Bar Review: Corporations

GENERAL INFORMATION

The National Conference of Bar Examiners administers the Uniform Bar Exam in the United States. One of the subjects tested on this exam is Business Associations, which consists of the law of Agency, Partnership and Corporations. Information on each of these topics is widely available in U.S. universities, public libraries, and on the internet.

This outline is to help with the study of Corporate law for the essay portion of the Uniform Bar Exam. The structure is taken from a PDF on the National Conference of Bar Examiner's website, which you find HERE.

Management and Control

Shareholders

Meetings

There are two types of shareholder meetings: annual meetings and special meetings.

Annual shareholder meetings are required. The primary purpose of such a meeting is to elect directors. Notice of the meeting must be given to all shareholders entitled to vote. It must be given no less than 10 days and no more than 60 days before the meeting. The notice must include the time, date, and place of the meeting. The notice requirement may be waived by a signed writing or by the shareholder attending the meeting.

Special meetings may be called by shareholders who own at least 10% of the shares entitled to vote at the meeting. The notice requirements for this type of meeting are the same as those for an annual meeting and include that the purpose of the meeting must be specified.

Shareholders may also take any action that could have been undertaken at a regular meeting without actually holding the meeting if they do so by unanimous written consent.

Voting

Eligibility and Notice Requirements

In order for a shareholder to be eligible to vote at a meeting, the shareholder must have been the owner of the share on the corporation's record date. That date can be established by the bylaws or the board of directors, and it cannot be more than 70 days before the relevant meeting.

Shareholders are entitled to vote on the selection of the board of directors, and for approval of any fundamental corporate changes. A fundamental corporate change might be amendments to the articles of incorporation or structural changes to the corporation.

There must be a quorum of eligible shares (not people) present at a shareholder meeting in order to vote. A quorum is usually the majority of votes entitled to be cast on the matter.

Cumulative/Proxy/Class/Trust/Shareholder Agreement Voting

Cumulative voting is allowed in some corporations when more than one director is to be elected. In that case, the shareholders may use all of their allowed votes for every director in support of just one. For example, if there are 4 directors and Bob owns 40 shares of stock, then Bob would have 4 x 40 = 160 cumulative votes for any director.

Shareholders may vote by proxy (i.e., allowing someone else to vote for you). A proxy vote must be executed in writing and delivered to the corporation. It is valid for 11 months unless otherwise specified.

Useful Vocabulary

Securities: permanent, long-term claims on the corporation’s assets and future earnings issued pursuant to formal contractual instruments

Capital structure: the debt securities and equity securities together

Debt securities: fixed claims that arise from funds borrowed by firm and that the firm agrees to pay interest on and repay in full on maturity

Equity securities: this typically refers to the shareholders or owner's rights in the corporation

Authorized shares: the number of shares the corporation can issue (sell)

Outstanding shares: the number of shares the corporation has sold and not repurchased