Corporate stockholder rights?

Question

The corporation has 25 stockholders. 10 of the 25 Stockholders represent 51 percent of the issued and outstanding stock. Only two of the ten are members of the seven member boar d. The board of directors has passed a resolution to issue and sell $50,000 of corporate debentures. The ten shareholders representing 51 percent of the outstanding stock disagree and want to block the issuance and sale of the debentures. Please Explain in detail the rights of all the parties.

Answer 1

I think a lot of the answers to your questions will come from the corporate bylaws, articles of incorporation, etc.  Probably what would need to happen is for the 51% majority to call for a special shareholder meeting and vote out the current board and install a new board that represents the 51%'s interests.  However, the corporate bylaws may actually state that you will need 75% of stock outstanding (not stock holding individuals) to call for a special shareholder meeting.

Answer 2

They have the right to request a special shareholder meeting on this issue, to approve or disapprove of the directors' resolution.

The request for a special shareholder meeting must be given to the corporate secretary, who will send meeting notices to all the shareholders.

The president will preside over the meeting.

A quorum of shareholders and/or their proxies must be present at the shareholder meeting.