ABC Inc. has 7 shareholders, T, U, V, W, X, Y, and Z, who are concurrently members of the Board of Directors. Director T called a special meeting of the Shareholders and Notices were sent to all, except Z because the corporation has no record of her current address. In that meeting, the attendees unanimously voted in favor of all motions brought forward. Which are true? I. If only X, Y & Z failed to attend the meeting, the meeting and resolutions are valid II. If Z was able to attend the meeting but protested improper notice, the meeting and resolutions are still valid III. If only T, U, V did not attend the meeting, and W protested the improper notice, the meeting and resolutions are still valid IV. If all shareholders were able to attend the meeting, despite improper notice, the meeting and resolutions are valid.

ABC Inc. has 7 shareholders, T, U, V, W, X, Y, and Z, who are concurrently members of the Board of Directors. Director T called a special meeting of the Shareholders and Notices were sent to all, except Z because the corporation has no record of her current address. In that meeting, the attendees unanimously voted in favor of all motions brought forward. Which are true? I. If only X, Y & Z failed to attend the meeting, the meeting and resolutions are valid II. If Z was able to attend the meeting but protested improper notice, the meeting and resolutions are still valid III. If only T, U, V did not attend the meeting, and W protested the improper notice, the meeting and resolutions are still valid IV. If all shareholders were able to attend the meeting, despite improper notice, the meeting and resolutions are valid.

• A. III and IV
• B. I and II
• C. II and III
• D. I and IV

Answer: (A)

The idea being tested is that notice is required for a special shareholders meeting, but a defect in notice can be cured if those entitled to notice actually attend and vote, or if all shareholders are present. Attending and voting by those who were not properly notified can fix the problem, unless those affected object to the notice. In the first scenario, the specific shareholder who was not properly notified (Z) does not attend. With only four directors/shareholders present and Z absent without participation, the defect is not cured, so the meeting and its resolutions are not automatically valid. That’s why this scenario is not true. In the second scenario, Z is able to attend but openly protests that the notice was improper. Her protest signals that the procedural defect remains unwaived, so the meeting and the resolutions are not valid in this view. Therefore this scenario is not true. In the third scenario, T, U, and V are absent, but W, X, Y, and Z attend, and Z attends despite the improper notice. Her presence cures the notice defect, and the meeting can proceed with valid resolutions despite the protest by W. This makes the meeting and its actions true in this case. In the fourth scenario, every shareholder is able to attend even though the notice was improper. With all shareholders present, the defect is cured by their attendance, so the meeting and the resolutions are valid. So, the correct statements are the ones where attendance cures the notice defect (the third and the fourth), while the first and second do not.

The idea being tested is that notice is required for a special shareholders meeting, but a defect in notice can be cured if those entitled to notice actually attend and vote, or if all shareholders are present. Attending and voting by those who were not properly notified can fix the problem, unless those affected object to the notice.

In the first scenario, the specific shareholder who was not properly notified (Z) does not attend. With only four directors/shareholders present and Z absent without participation, the defect is not cured, so the meeting and its resolutions are not automatically valid. That’s why this scenario is not true.

In the second scenario, Z is able to attend but openly protests that the notice was improper. Her protest signals that the procedural defect remains unwaived, so the meeting and the resolutions are not valid in this view. Therefore this scenario is not true.

In the third scenario, T, U, and V are absent, but W, X, Y, and Z attend, and Z attends despite the improper notice. Her presence cures the notice defect, and the meeting can proceed with valid resolutions despite the protest by W. This makes the meeting and its actions true in this case.

In the fourth scenario, every shareholder is able to attend even though the notice was improper. With all shareholders present, the defect is cured by their attendance, so the meeting and the resolutions are valid.

So, the correct statements are the ones where attendance cures the notice defect (the third and the fourth), while the first and second do not.