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writing and must be filed with the corporation. They ensure that futuredisputes will not prevent the participating shareholders from controllingthe corporation.Pooling Agreements Instead of a voting trust, a group of shareholdersmay make a pooling agreement , or a contract to vote in a certainway on a particular issue. Pooling agreement are also called shareholderagreements or voting agreements. These agreements differ from proxiesand voting trusts because the participating shareholders retain controlof their own votes. Also, pooling agreements may be perpetual and maybe kept secret.Shareholder Proposals Shareholders have the right to participatein shareholder meetings, including a chance to speak and offer proposals.A shareholder proposal is a resolution or policy suggested by a shareholder.It may be an amendment to the corporation’s articles, a limit onthe corporation’s charitable contributions, a ceiling on the pay of thecorporation’s top executives, or some other suggestion.Right to SueShareholders have the right to sue the corporation to enforce theirrights and to sue others on behalf of the corporation to enforce rights ithas neglected.Shareholders may bring a direct suit if they believe that they havebeen deprived of rights that belong to them. Shareholders may also bringa class action lawsuit against a corporation on behalf of all shareholdersin their position.In a derivative suit , shareholders sue the corporation’s managementon behalf of the corporation. A derivative suit is based on an injuryto the corporation. The shareholders’ right to sue is derived from theinjury to the corporation. A shareholder may bring a derivative actionsuit against the chief executive officer on behalf of the corporation forthe benefit of the corporation.Example 3. Steve White is the president and chairman of theboard of the OTTO Corporation. To cover several outstandingpersonal debts, he diverts money from the company. Because hecontrols the board of directors, they are not inclined to do anything.However, Rachel Kent, a shareholder of OTTO stock,decides to bring a derivative suit against the president on behalfof the corporation for the benefit of the corporation.Derivative suits are more difficult to bring than direct suits becausecertain prerequisites must be met before a shareholder is eligible to filesuch suits. For example, the shareholder must have owned stock in the4-HJoining clubs or groupsis an easy way to meetpeople who share yourinterests. One club youmay not know aboutis 4-H. The purposeof 4-H, whose namestands for the wordsHead, Heart, Hands,and Health, is to helpyoung people discoverand develop theirpotential. 4-H achievesthis goal by encouragingyou to set yourown goals.The 4-HMember’s Creed endswith this pledge: “Ibelieve in my country,my state, my community,and in my responsibilityfor theirdevelopment. In allthese things I believe, Iam willing to dedicatemy efforts to theirfulfillment.” Is thisa pledge that youcould make? Why orwhy not?Get InvolvedFind out more informationabout a 4-H club inyour area. Research thelaws that governmentfinancedclubs andorganizations mustobey.Chapter 29: Operating a Corporation 631