MBE Rules · Business Associations
Shareholder Meetings and Quorum
Cal. Corp. Code § 600
The rule
Annual meetings elect directors; special meetings may be called by the board, 10% shareholders, or authorized persons; a majority of voting shares is the default quorum, and most matters pass by majority of shares represented.
In plain English
Shareholder meetings are essential for electing directors and making important company decisions. A quorum, which is typically a majority of voting shares, must be present for the meeting to proceed, and most decisions require a majority of the shares represented to pass.
Worked example
At the annual meeting of XYZ Corp, only 55% of the voting shares are represented. The shareholders vote on a new director, and the majority of those present support the candidate. Since a quorum is met, the election is valid, and the new director is elected.
Memory hook
No quorum, no quorum, no business can be done!
The trap
Exams may present scenarios where a meeting is held without a proper quorum, leading students to mistakenly believe decisions can still be valid. Watch for details about the number of shares represented.
How examiners test it
This rule often appears in questions regarding the validity of shareholder meetings or the outcomes of votes, requiring candidates to analyze whether a quorum was present.
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