The Shareholders of a Corporation

Make sure your shareholders have a voice in the running of your corporation, or you may may find yourself in legal hot water.

The founders of the business typically buy stock in the company and are the first shareholders. Later on, investors can contribute money or other assets and also become shareholders.

Various actions of the corporation require action by the shareholders, and these actions must be reflected in minutes of meetings or by appropriate written consents. A corporation is typically required to hold annual meetings of shareholders, the principal purpose of which is to elect the members of the board of directors. For more information, read Shareholder Meetings.

Some of the actions for which the shareholder approval may be required or desirable include the following:

• Merger or reorganization of the corporation
  
• Amendment to the Articles of Incorporation (read The Articles of Incorporation for details)
  
• Amendment of the bylaws (other than an amendment settling the exact number of directors within the range established by the bylaws or Articles of Incorporation)
  
• Sale or transfer or all or substantially all of the corporation's assets
  
• Approval of contracts with interested directors
  
• Authorization of indemnity of a corporate agent for liability incurred when acting on behalf of the company
  
• Issuance of certain securities
  
• Adoption of stock option plans
  
• Dissolution or winding up of the corporation

Click here to view sample shareholder resolutions.

Research the various legal business structures available and find the right fit for your new business at AllBusiness.com.

Copyright © 1999 - 2007 AllBusiness.com, Inc. All rights reserved.