Which management decisions will require shareholder approval?
- Appointment of auditors (if there are any)
- Appointment or re-appointment of directors.
- Removal of a director or the auditor.
- Adoption of the annual accounts and the reports of the directors and auditors.
- Declaration of dividends.
Stockholder Approval Required to: Amend the Certificate of Incorporation. Enter into fundamental corporate transactions (sale of company, merger, sale of substantially all assets of corporation, etc.) Elect Directors (though vacant seats from departed directors can often be filled by Board)
What decisions need approval from your board of directors?
When Are Board of Director Approvals Required?
- Amendments to the certificate of incorporation or bylaws.
- Equity grants or transfers (stock options or warrants).
- Distributions to stockholders.
- Borrowing or lending money.
- Adopting an annual budget.
- Hiring, terminating or amending contracts of senior management.
Shareholders v Directors – who wins?
- to attend and vote at general meetings of the company;
- to receive dividends if declared;
- to circulate a written resolution and any supporting statements;
- to require a general meeting of the shareholders be held; and.
- to receive the statutory accounts of the company.
Shareholder Approval means approval of holders of a majority of the shares of Stock represented and voting in person or by proxy at an annual or special meeting of shareholders of the Company where a quorum is present.
What decisions can the shareholders make?
- amending the companies articles by special resolution;
- changing the name of the company by ordinary resolution;
- approving a substantial property transaction by ordinary resolution;
A director cannot enter into a contract to acquire anything of substance from the company, or to sell anything of substance to the company, unless shareholders have first approved the deal by passing an ordinary resolution, or the contract is conditional on getting that approval.
What policies should be approved by the board?
It is good governance practice for a Board to review a list of policies and procedures that the organisation.
Core policies and procedures typically approved by a Board include:
- Staff Handbook.
- Health and Safety.
- Conflicts of Interests.
- Data Protection (GDPR) and Privacy.
What does unanimous written consent mean?
Unanimous Written Consent means a written consent executed by at least one representative of each Member.
Loans and Quasi-Loans
Member approval is required for loans by a company/parent company to a director or for the company providing a guarantee/security to any person for a loan made to a director. Again, a majority of the voting shareholders are generally needed to provide approval.
Shares cannot be issued without the approval of the company’s board. The company must then be paid something of value for the stock. When a company issues stock, it also needs to comply with securities laws at the state and federal level.
What decisions does CEO make?
To align the two, CEOs should decide what’s most important (e.g., avoid debt, align talent), determine what’s out of your control, establish precise objectives, communicate the strategy, and hold people accountable to results.