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Rights of Shareholders of the Corporation - YouTube
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What is the role of the shareholder in
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the corporation? Well the shareholders
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are owners of the corporation, they hold
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the ownership interest units that is
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shares of stock of the corporation.
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And in that role but they may have a broader
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role that is particularly in closely
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held corporations they may serve in
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other functions, that is as directors and
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as officers of the corporation but
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purely as shareholders of a corporation
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if they assume no other duties there are
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basic rights that they hold or roles
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that they have in the corporation. And to
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start with they have a right to all
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corporate information, that is the
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information coming out of the min
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the meeting minutes of the corporation
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the and access to documents as long as
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this in good faith and for a proper
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purpose they can always review the
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corporate documents this is particularly
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strong in states that followed the the
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model business code. Their primary
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rights though is thought of it as the
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right to vote, so shareholders vote on
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several things. Number one they vote to
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elect the Board of Directors the
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individual directors. Now this is a huge
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area of corporate governance the
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procedures and mechanisms for voting to
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elect directors of the corporation.
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As well as to vote on other things,
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so shareholders also have the right to vote
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on major changes in the corporation, that
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could be a merger acquisition, new share
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issuance, or anything like that. And then
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another major change specifically is
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involves any changes to the primary
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governing documents of the corporation,
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so changes to the bylaws or changes to
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the Articles of a corporation generally
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the shareholders have some level of vote
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in that process to approve that, so the
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right to information and the right to
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vote are the two primary rights for the
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shareholders. Now there are other rights
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that vary in their intensity. To start
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with the right to have shareholder
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meetings or have shareholder meetings
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called either special meetings or at a
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bare minimum
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annual meetings. And it's generally at
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these annual meetings where the
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shareholders undertake or exercise their
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rights to vote. Okay. So there are certain
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notice requirements for these these
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shareholder meetings and requirements of
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access to information during that time
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and the access to information. Sometimes
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this is known as proxy rules the
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access to put information out to the
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corporation itself for vote prior to
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these meetings so that's a that's an
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important right as well access to
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meetings. And then like I said the
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ability to make proposals at the meeting
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or before the meeting for the subject of
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vote. All right.
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Whether it's proposing a director for
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election to the board which is,
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traditionally not the role or task of
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the shareholder but there are situations
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where shareholders are acquiring more
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and more rights to do this process
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rather leaving that to a nomination
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committee with the directors that
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shareholders themselves are putting
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forward this information out. Not every
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shareholder has that right to make
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proposals at the end of annual meeting
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for vote but certain qualified
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shareholders can do that and that
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generally entails a certain level of
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ownership in the corporation. And then
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lastly there's dissention rights. Okay.
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The ability to oppose certain corporate
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action and if you cannot divest yourself
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of your interest on the public market
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then you have rights to have the
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corporation itself repurchase your
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shares as part of your opposition to any
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action that the corporation is taking.
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So by and large these are the primary rights
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that the shareholder has in their role
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as owners of the corporation.
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