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Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller
Edition 10ISBN: 978-1305075443Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller
Edition 10ISBN: 978-1305075443 Exercise 14
FACTS During a shareholders' meeting of Sink Rise, Inc., a Wyoming corporation, Cale Case was the only shareholder present in person. He concluded that a quorum existed and voted on and passed several resolutions. He also elected himself and another shareholder to be on the board of directors, replacing his estranged wife, Shirley Case, as the corporation's secretary. Shirley filed a complaint in a Wyoming state district court against Sink Rise and Cale to set aside the action taken at the meeting. The court concluded that the resolutions were passed with authority and did not set them aside. Shirley appealed to the Wyoming Supreme Court, arguing that the
shares she held jointly with Cale could not be counted for quorum purposes.
ISSUE Were the shares held jointly by Cale and Shirley "entitled to vote" at the meeting?
DECISION Yes. The Wyoming Supreme Court affirmed the lower court's judgment, holding that the resolutions of the meeting were passed with authority.
REASON The shares owned by Cale and Shirley were owned with rights of survivorship in a tenancy by the entirety -that is, each spouse owned an undivided 100 percent interest in the shares. Sink Rise's bylaws provided that to be counted in a quorum, shares had to be entitled to vote and be represented in person or by proxy. The bylaws did not prohibit stock owned by a spouse in a tenancy by the entirety from being counted for the purpose of a quorum if they were represented in person. Thus, because the shares held jointly by Cale and Shirley were represented in person at the shareholders' meeting, they could be counted for quorum purposes. Although the shares were "entitled to vote," they could not be voted without agreement between the joint owners. But Cale did not vote the shares at the meeting-he considered them only for quorum purposes.
FOR critical analysis-Economic Consideration What policy reasons support the application of lower, instead of higher, quorum requirements?
shares she held jointly with Cale could not be counted for quorum purposes.
ISSUE Were the shares held jointly by Cale and Shirley "entitled to vote" at the meeting?
DECISION Yes. The Wyoming Supreme Court affirmed the lower court's judgment, holding that the resolutions of the meeting were passed with authority.
REASON The shares owned by Cale and Shirley were owned with rights of survivorship in a tenancy by the entirety -that is, each spouse owned an undivided 100 percent interest in the shares. Sink Rise's bylaws provided that to be counted in a quorum, shares had to be entitled to vote and be represented in person or by proxy. The bylaws did not prohibit stock owned by a spouse in a tenancy by the entirety from being counted for the purpose of a quorum if they were represented in person. Thus, because the shares held jointly by Cale and Shirley were represented in person at the shareholders' meeting, they could be counted for quorum purposes. Although the shares were "entitled to vote," they could not be voted without agreement between the joint owners. But Cale did not vote the shares at the meeting-he considered them only for quorum purposes.
FOR critical analysis-Economic Consideration What policy reasons support the application of lower, instead of higher, quorum requirements?
Explanation
Verified
Verified
Requirement of Quorum:
Quorum represent...
Cengage Advantage Books: Fundamentals of Business Law Today 10th Edition by Roger LeRoy Miller
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