| In a corporation or a company that has undergone the | | | | shareholders to elect a different corporation as a |
| incorporation process, the individuals that make up the | | | | member of the board of directors. |
| shareholders have a number of specific rights that | | | | When it comes to removing directors from a board, |
| they must exercise or be allowed to exercise. The | | | | shareholders have just as important a job to do. If a |
| strictly enumerated rights of shareholders vary from | | | | director doesn't perform his or her responsibilities |
| state of incorporation to state of incorporation but | | | | adequately or does something else that warrants |
| there are some rights that must be addressed in | | | | removal from the board, the shareholders are the only |
| general. | | | | ones that can remove the individual from the board. |
| First of all, Delaware is the state where more than | | | | Directors in the United States, particularly under |
| 90% of all corporations incorporating in the United | | | | Delaware rules, cannot be removed by their peers; |
| States are "based" or "incorporated" legally. This | | | | instead, they may only be removed by the |
| means that the rights afforded to shareholders under | | | | shareholders. |
| the Delaware incorporation rules are the majority | | | | When the shareholders wish to remove a director |
| opinion. | | | | from the board, they can do so either by showing |
| Under the Delaware statute, the primary right of any | | | | cause for removal or by not showing cause for |
| shareholder in a corporation is to elect and remove | | | | removal. The requirement of cause applies to |
| directors of the company. This integral right of all | | | | staggered boards in Delaware. There are two ways |
| shareholders is the reason why incorporations are | | | | to show "cause" for removal: fraud or malfeasance. |
| chosen so frequently by organizations. The form of | | | | Other shareholder powers include the ability to vote on |
| corporate governance provides a guaranteed voice in | | | | other transactions that are put to them by the |
| the running of the company to everyone that has | | | | directors. Shareholders also have the ability or power |
| invested something in the company, whether it be via | | | | to enact a pregatory motion. These motions allow |
| being a founder of the company, a financial backer at | | | | shareholders to have their opinions on a certain idea |
| the company's inception, or an ordinary purchaser of | | | | heard and so are commonly called "shareholder |
| stock. | | | | proposals." |
| Through this right, all shareholders of a company have | | | | Overall, shareholders in American corporations enjoy a |
| the right to elect directs on an annual basis. The people | | | | number of rights that give them the power to oversee |
| that the shareholders elect have to be natural people. | | | | the board of directors and have a voice in the running |
| This distinction is important because other systems of | | | | of the corporation. |
| corporate governance, particularly in England, allow | | | | |