Louisiana Unanimous Action of Shareholders Increasing the Number of Directors
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FAQ
The balance of power between shareholders and the board of directors often depends on the company structure and legal frameworks. Shareholders hold power when they vote on key issues, including the Louisiana Unanimous Action of Shareholders Increasing the Number of Directors. This action allows shareholders to directly influence management by expanding the board. Thus, their collective decisions can shape the strategic direction of the company.
The shareholders can vote to remove directors from the board before their terms expire, with or without cause, unless the corporation has a staggered board. The shareholders can then vote to replace the directors they removed.
A shareholder brings a direct action because s/he believes that the corporation has violated some type of duty owed to the shareholder. However, this same individual can also file a class action lawsuit as a representative of an entire class of shareholders whose rights have allegedly been abridged or violated.
However, shareholders do have some power over the directors although, to exercise this power, shareholders with more that 50% of the voting powers must vote in favour of taking such action at a general meeting. One of the main powers that the shareholders have is to remove a director or directors.
The owners of a corporation are its stockholders, and the owners, at least in theory, can do almost anything they want, including firing members of an incompetent board of directors. There are many obstacles, but it can be and has been done.
Can shareholders remove a director? As mentioned above, shareholders can remove a director before the expiration of his or her period of office by way of an ordinary resolution. However, written resolutions cannot be used to remove a director, the voting must take place at an actual general meeting of the shareholders.
The resolution to remove the director is passed by a simple majority (i.e. anything over 50%) of those shareholders who are entitled to vote, voting in favour.
A director can also be removed for cause by a court order, but the court will require at least 10% of the outstanding shares to petition for removal, and a showing of fraudulent or dishonest acts or gross abuse of authority by the director to be removed.
(a) Subject to subdivisions (b) and (f), any or all directors may be removed without cause if: (1) In a corporation with fewer than 50 members, the removal is approved by a majority of all members (Section 5033). (2) In a corporation with 50 or more members, the removal is approved by the members (Section 5034).
As directors only owe their duties to the company, shareholders can only initiate litigation where they bring a claim in the company's name and claim for the company's loss, not their own.
