Drew Morrison-CityGuru Investors may feel as abused stepchildren, but as Shareholders, they have very special rights; rights both parties are either unaware or have chosen to ignore.
Examining these rights as they apply to CityGuru Shareholders will provide an unexpected turn in your investor Due Diligence. While CityGuru Shareholders share rights basic to all shareholders, in many instances they cannot exercise their rights due to certain organizational deficiencies in the CityGuru corporation.
Shareholders in a corporation are shielded from personal liability for the debts and liabilities of the Corporation. However, shareholders can lose their entire investments should the corporation fail. This is why understanding the impediments to exercising your CityGuru Shareholder rights are equally important as understanding the real worth of your Shares in CityGuru.
SIX BASIC RIGHTS OF DREW MORRISON-CITYGURU SHAREHOLDERS
On the day you wired your investment funds to Drew Morrison in return for shares of CityGuru, Inc. you became a Shareholder; and one with six basic rights that all Shareholders share. They are:
RIGHT No. 1: VOTING POWER ON MAJOR ISSUES
This allows you to vote on issues that affect the CityGuru as a whole. Voting takes place at the company’s annual meeting. If you can’t attend, you can do so by proxy and mail in your vote. This includes:
|1.||Electing directors or BOARD Members|
|2.||Proposals for fundamental changes affecting the company|
|3.||Other Significant matters may include:|
|a. Approval/disapproval of changes in the articles of incorporation (you did receive a copy when you wired your money to Drew Morrison, didn’t you?)|
|b. Approval/disapproval of a merger with another corporation|
|c. Approval/disapproval of the sale of substantially all of the corporation’s assets (A CityGuru Balance sheet would, if available, identify those assets)|
|d. Approval/disapproval of the voluntary dissolution of the corporation (this is not up to the Founder to decide)|
|e. Approval/disapproval of corporate transactions where some directors have a conflict of interest|
|f. Approval/disapproval of amendments to bylaws or articles of incorporation (You did receive a copy, didn’t you?)|
|g. Make nonbinding recommendations about the governance and management of the corporation to the board of directors (Despite what you may have been told: you are entitled to know the identity of the Board members—without having to sign a Non-Disclosure Agreement).|
RIGHT No. 2: OWNERSHIP IN A PORTION OF THE COMPANY
While Shareholders risk partial or total loss of their investment in CityGuru should it fail as a corporation, they own a piece of the prosperity should the company thrive and profit. This includes:
1. Any assets of the corporation
2. Right to share in the proceeds recovered when the corporation liquidates its assets.
RIGHT No. 3: RIGHT TO TRANSFER OWNERSHIP
This means Shareholders are allowed to trade their stock on an exchange. The right to transfer ownership might seem mundane, but the liquidity provided by stock exchanges is extremely important.
RIGHT No. 4: AN ENTITLEMENT TO DIVIDENDS
Along with a claim on assets, Shareholders also receive a claim on any profits a company pays out in the form of a dividend. Management of a company essentially has two options with profits: they can be reinvested back into the company (hopefully increasing the company’s overall value) or paid out in the form of a dividend. The Shareholder does not have a say in what percentage of profits should be paid out—this is decided by the Board of Directors.
RIGHT No. 5: OPPORTUNITY TO INSPECT CORPORATE BOOKS AND RECORDS
In publically traded companies, this is usually provided through a company’s public filings, including its annual report. With private companies, who are not required to publically report their financials, the inspection of books and records is even more important.
RIGHT No. 6: THE RIGHT TO SUE FOR WRONGFUL ACTS
Shareholders have the right to bring suit against the corporation for the wrongful acts by its founders, directors and officers of the corporation. These lawsuits are usually brought in the form of “derivative” action in representation of all the Shareholders (Class Action) or by individual Shareholders such as in the case of an individual being denied right to vote in corporate elections. A good overview of this is presented in SHAREHOLDER DERIVATIVE LITIGATION and THE BIGGEST STOCK SCAMS OF ALL TIME
OTHER SHAREHOLDER RIGHTS
Other rights often shared among shareholders are specifically addressed in the corporation’s by-laws or Articles of Incorporation, Corporate Governance and Shareholder Rights Plan. These often cover other important Shareholder rights such as: Shareholder preemptive rights, Conversion rights, and Redemption Rights.
Because CityGuru, Inc. does not offer a Corporate Governance and Shareholder Rights Plan, these rights are assumed not to apply to the CityGuru Shareholder and are not defined here. An excellent source of detail regarding these Shareholder rights as well as the Basic Rights discussed here please reference Investopedia’s Shareholder Rights.
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