BORGS formation + acrobats + IAD

Question 1

Known as the matters peculiar to a company…

Answer 1

Internal affairs. This doctrine applies the law of formation state. [All 50 states use]

Question 2

Where is the I.A.D. followed?
Rationele behind it?

Answer 2

1. All 50 states
2. Its consistent, its certain, and participating members of entity have consented to its use.

Question 3

The IAD was strongly endorsed by SC in what case?

Answer 3

CTS corp. v. Dynamic Corp.

Question 4

This doctrine lays out a lot of what you see in entity statutes.
1. Election process directors
2. merger process
3. formation process
4. acquisitions, etc.

Answer 4

I.A.D. used in all 50 states

Question 5

How does IAD work?

DL company in SC for example.

Answer 5

SC applies DL law b/c SC follows the IAD which says law of formation state governs.

Question 6

Case that showed the alternatives to IAD are inconsistent and would sow chaos?

Answer 6

McDermitt v. Lewis

Question 7

How is spin off completed?

Answer 7

1. Parent assets > SubS.
2. SubS. stock > Parent SHs
3. New company starts operating with its own leadership and stock.

Question 8

Acquisition process?
Blue wants control of red

Answer 8

Make tender offer of 51%

Question 9

Conversion process?

Answer 9

1. File C.O.C. with SOS
2. Name + address of converting entity
3. Name + address of converted entity

Question 10

DFMD case?

Answer 10

Farris v. Glen Alden. A “cash-out” sale that would otherwise be a merger will be recognzied as such to afford appraisal right protections back to SHs.

Question 11

What does the DFMD do?

Answer 11

Treats a cash out just like a merger, giving appraisal rights back.

Question 12

Does DL follow DFMD?

Answer 12

No. They treat each transaction as “its own independent legal transaction.”

Therefore, in DL, a company may execute a cash out [what would otherwise be a merger] and circumvent protections typically provided to SHs in a merger.

Question 13

Whats the difference between cash out and merger?

Answer 13

1. Only vote is for SHs of selling company to sell [b/c selling substantially all]
   2.No appraisal rights
   3.. Company dissolved and all property to buying company

Question 14

2 merger types?

Answer 14

Short form [Parent eat sub]
Small scale [Big eat little]

Question 15

Statutory merger?

Answer 15

1. A & B boards devise merger plan
2. Present to shareholders
3. Voting executed. Dissenting SHs reserve appraisal rights.
4. Merge
5. New entity purple
6. Dissenting SHs paid out

Question 16

Partnership formation?

Answer 16

1. No registration required as not chartered entity
2. McArthur v. Stein [Control, share, contribute, associate]
   Happens when 2 or more persons associate for profit

Question 17

LLP formation?

Answer 17

1. Vote internally
2. File S.O.Q
3. Pay fees
4. Annual reports

Question 18

LP formation?

Answer 18

1. File certificate of LP
2. 1 person becomes LP and one person becomes GP

Question 19

LLC formation?

Answer 19

1. File certificate of organization
2. At least one person becomes member
   * May be created for any lawful purpose
   * Comply with name uniqueness + use LLC name identifiers

Question 20

Corporation formation?

Answer 20

1. Pick state
2. Pick entity type
3. Pick name + Register (Name must be unique + use entity designator)
4. File A.O.I.
   a. Incorporator name
   b. purpose
   c. set stock + sell price
   d. Corporation address + name
   e. Incorporator(s) address + names
   f. How managed [Board of directors, member managed, etc.]