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.

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:

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).

Point for CityGuru DUE DILIGENCE: Currently, Drew Morrison-CityGuru does not provide the right and opportunity for Shareholders to vote annually on any of these topics or the critical issues detailed elsewhere in this blog. Voting power of each Shareholder is determined by the percentage of share he/she owns of the total issued CityGuru shares. This voting power was greatly diluted in 2011 upon the incorporation of CityGuru from its former On The Go Technologies entity with the issue of 10,000,000 shares. Divide the number of your shares by 10,000,000 to determine the weight of your CityGuru vote.

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.

Point for CityGuru Due Diligence: As with voting power, the “Portion” of the company each Shareholder is entitled depends upon the PERCENTAGE of the total shares he/she owns. That same percentage of vote applies to your percentage of ownership. Just as important, is where you rank in the hierarchy of bankruptcy rights. CityGuru common Stockholders stand in line behind CityGuru Preferred stockholders who stand in line behind the bond/debt holders. There were (4) unidentified holders of CityGuru Debt instruments created in a May 13, 2013 SEC filing.

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.

Point for CityGuru DUE DILIGENCE: this generally applies to stocks that are traded on a public exchange. As a private company with no access to a public exchange or a market for its shares, the CityGuru Shareholder has no LIQUIDITY or EXIT in which to transfer ownership—at least within the next several years.

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.

Point for CityGuru DUE DILIGENCE: Two very serious issues surface for the CityGuru Shareholder when trying to exercise this right: (1.) Who is the Board of Directors who determine dividend payments to Shareholders, and; (2.) How does the company or Shareholder determine profit without the benefit of an accounting system or financial reporting? This poses a very sticky dilemma for CityGuru management while trying to explain how much, when, where and how “profit” was “reinvested” into the company!

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.

Point for CityGuru DUE DILIGENCE: Under court oath, Founder Drew Morrison has repeatedly claimed there are little or no books or records to inspect. Obviously, the CityGuru Shareholder will simply have to contend without the ability to exercise this right.

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

Point for CityGuru DUE DILIGENCE: In another post, we will examine reports by some CityGuru Shareholders whereas their requests for money are being withheld as leverage by the company to stave off their own potential legal action against the founder for wrongful acts. Sign up for our new post notifications.

                                                            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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hottip[showhide type=”hottip2″ more_text=”- Still unclear what rights you have based upon your agreement with founder Drew Morrison?” less_text=”- Still unclear what rights you have based upon your agreement with founder Drew Morrison?”]With no Shareholder Rights Plan, combined with differing terms in all agreements, CityGuru Shareholders, indeed, have very scanty information regarding their rights. Share with us the particular written agreement you executed with Drew Morrison and we can outline Shareholder rights that may apply specifically to you. This service, of course, is free to CityGuru Shareholders. .