A . What is a quorum of the board of directors for purpose of conducting corporate business? What does the Revised Act say with regard to a quorum? What is a supermajority requirement? b. The directors of Bigkey, Inc can't decide whether to declare a

Question

dividend, so the board appoints a committee consisting of the president of the corporation, the vice president of the corporation, and the treasurer to decide whether to pay a dividend. If the committee wants to declare a dividend, the directors say the officers can pay it immediately before the next board meeting. Is this a permissible delegation of corporate authority? Explain.

Answer 1

a . A quorum is the minimum number required to be present at a meeting to transact business. A majority of the board members constitutes a quorum. Most states do not allow a quorum to be set at less than a majority, but the Revised Act and some states allow the bylaws or articles of incorporation to authorize a quorum consisting of as few as one-third of a board's members. A supermajority requirement is a requirement that more than a simple majority vote in favor of certain items for them to pass. Closely held corporations sometimes require a supermajority or unanimous vote of the board for some matters.
b. A committee to act on behalf of the board, to be properly formed, must be made up of all directors, not officers. Even if the committee is properly formed, there are certain exceptions to the general rule that committees may exercise the authority of the board. A committee cannot declare a dividend; only the board can. The committee could, however, make a recommendation on the matter.