What Rights Do Shareholders Have?

Under most state statutes, the rights of shareholders generally depend on provisions in the corporation's Articles of Incorporation, Code of Regulations, By-laws, Close Corporation Agreement or other Shareholder Agreement.  Accordingly, these documents should be checked first when a shareholder is trying to determine his or her rights.  Shareholders of a corporation often have the following rights:

(1) Voting rights to elect directors, adopt the corporation’s Code of Regulations or amend the Corporation’s Articles of Incorporation;

(2) Voting rights on significant or extraordinary events that affect the corporation such as sale of all assets, merger, consolidation, liquidation, or dissolution of the corporation;

(3) Rights related to the sale, exchange or transfer of stock such as preemptive rights, put rights and call rights;

(4) Rights to receive dividends declared by the board of directors;

(5) Rights to inspect the books and records of the corporation;

(6) Rights to sue the corporation for wrongful acts by the directors and officers; and

(7) Rights to share in the proceeds when the corporation liquidates its assets.

If you have any questions about shareholder rights, or would like assistance preparing Articles of Incorporation, or other corporate governance documents, give me a call.  Jsenney@pselaw.com or 937-223-1130.

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AND ONE MORE THING.   H.B. 153 signed into law by Ohio Governor John Kasich on June 30, 2011 established a non-refundable income tax credit for small businesses which employ at least 50 fulltime employees in Ohio and have assets less than $50 million or sales less than $10 million.  Want to know more about the new Ohio income tax credits?   Give me a call or email at Jsenney@pselaw.com or 937-223-1130.

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