Question
Wallace owned 50.25 percent of the shares of Capital Credit & Collection Service, Inc. (CCCS), with Jones and Gaarde each owning 24.8 percent. Those three
Wallace owned 50.25 percent of the shares of Capital Credit & Collection Service, Inc. (CCCS), with Jones and Gaarde each owning 24.8 percent. Those three shareholders also constituted the board of directors. At a directors' meeting, a majority of the directors, that is, Jones and Gaarde, removed Wallace as president and elected Jones president and Gaarde secretary of the corporation. The following month at a shareholders' meeting at which Gaarde was absent, Wallace voted his majority of the shares to remove Jones and Gaarde as directors of the corporation and to replace them with Roberts and Smith. Under the Oregon Business Corporation Act, a valid shareholders' meeting required a quorum of shares equal to a majority of the shares unless a different quorum is provided in the articles of incorporation. CCCS, however, in its corporate bylaws, had a requirement that a quorum for a shareholder meeting was equal to 100 percent of the shares. Wallace had agreed to the bylaw as a shareholder and director of CCCS. Was the shareholder meeting at which Wallace removed Jones and Gaarde invalid due to the lack of a quorum?
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