This post discusses which corporate actions require shareholder approval. The following pertains to California corporations. Corporations formed in other states will have different requirements.
Section citations below refer to the California Corporations Code.
Please note that the following may not be a complete list of all shareholder approval requirements.
Board of Directors
Shareholders own the corporation. The board of directors is responsible for overall management of the corporation’s affairs in the best interests of the corporation and its shareholders. (See Directors’ Fiduciary Obligations: Delaware vs. California.)
Shareholder approval is required for the following actions pertaining to directors.
- Election of directors at annual shareholder meetings – Section 301.
- Removal of directors – Section 303.
Other Shareholder Approval Requirements
Other actions that require shareholder approval include the following.
- Adopting, repealing or amending bylaws (though such rights may be granted to the board, as well) – Section 211.
- Approving loans to, or guaranteeing the obligations of, directors or officers – Section 315.
- Amending Articles of Incorporation – Section 902.
- Disposition of all or substantially all of the corporation’s assets – Section 1001.
- Under certain circumstances, conversion of a corporation to a different type of business entity – Section 1153.
- Reorganization of a corporation – Section 1201.
- Voluntary dissolution – Section 1900.
Related posts:
- When Should We Have our First Annual Meeting of Shareholders?
- Which Financial Information Must a Corporation Provide to its Shareholders?
- Who Gets to See the Shareholder List?
Dana H. Shultz, Attorney at Law +1 510-547-0545 dana [at] danashultz [dot] com
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact a lawyer directly.
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