Legal Question in Business Law in Utah

Shareholder Rights in sub-S

I hold over 12% of a sub-s company. Assuming the regular rules of a sub-S: Is there any requirement as to the number of shares held to be put into the chairmanship? Or does it just take a majority vote of the other shareholders? Also, is there such a thing as some of the shares having more voting rights than others? Or in other words are there major and miner shares under the same allotment of shares? I hope I'm clear.


Asked on 8/12/02, 5:44 pm

1 Answer from Attorneys
Alvin Lundgren Alvin R. Lundgren, L.C.

Re: Shareholder Rights in sub-S

Corporations, including subchapter-s (which refers only to a tax designation status) are operated under the terms of a By Laws and a Shareholder Agreement. These documents set forth the rules for operation of the company and how stock is handled. The rules can vary a great deal from corporation to corporation. You would have to get copies of these documents and read them.

A corporation can have several difference classes of stock, some (Preferred shares) offer greater returns and more voting rights than other classes of shares (Ordinary Shares).

Generally a chairman is elected by the shareholders at an annual meeting, and usually requires at least a majority (51%), although the By-Laws can specify a super majority.

If the company has not adopted bylaws, there are default bylaws in the Utah Corporations Code which would apply.

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Answered on 8/12/02, 5:59 pm


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