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Business Flashcards

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1
Q

Agent Fiduciary Duties

A

Duties A to P
Duty of Care
Duty to Follow instructions
Duty of Loyalty
Duty of Communication

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2
Q

Independent Contractor

A

Typically no liablility because principal does not normally have the control required for a principal/agent relationship.

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3
Q

Independent Contractor as Agent exceptions

A

Ultra hazardous activity
Estoppel
Non-delegable duties
Hiring Incompetency

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4
Q

Intentional Torts

A

Intentional Torts are normally outside the scope of the agency relationship.

Exception:
Authorized by principal
Naturally occuring from the duties
Motivated by desire to serve the principal

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5
Q

Principal’s Remedies

A

Discharge
K Lawsuit
Tort Lawsuit
Equitable Accounting Action
Indemnity for Liability to third parties by agents Wrongful actions
Withhold compensation

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6
Q

Effects of Disassociation

A

The disassociated partner will no longer be entitled to participate in the management of the company and the partnership must buy out the partner’s interest and indemnify him or her against pre and post disassociation liabilities not incurred by the partner’s acts. However, the dissociated partner remains liable and may be liable for certain obligations arising within two years after the date of disassociation.

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7
Q

Principal / Agent relationship

A

An agency is a legal relationship where an agent is authorized to represent a principal in business dealings with third parties. The Principal-Agent relationship requires 1) assent, 2) benefit for the principal, 3) control of agent and some capacity.

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8
Q

Assent for principal/agent relationship

A

Must be some agreement, either formal or informal, between the principal and the agent whereby the principal has the right to control the agent. Manifested consent of both parties is required. Evaluated by the objective intent manifested in their actions.

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9
Q

Principal Liability for Agent Contracts

A

Principals are liable for contracts entered into by agents if authorized. Authority may be by actual, actual implied, apparent, or via ratification.

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10
Q

Partnership

A

A partnership is an association of two or more people to carry on as co-workers a business for profit. Partnership law is based on the law of contract and agency. A “person” can be an individual, trust, corporation, partnership or other entity.

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11
Q

Partnership Legal Status

A

A partnership is a legal entity and it is distinct from the partners that make up the partnership. The partnership can own land as well as be sued.

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12
Q

Partnership Governing Law

A

The Revised Uniform Partnership Act “RUPA” will apply, except to the extent partners create their own written agreements and the RUPA does not preempt those.

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13
Q

Partnership Formation

A

A partnership can be formed for any legal purpose. There are no formalities to becoming a general partnership. It may exist through conduct alone. Courts will look to the intent of the parties, sharing of profits, and joint title to property.

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14
Q

Profit Sharing (Partnerships)

A

The contribution of money or services in return for a share of the profits (if any) is prima facie evidence of a general partnership. There must be an intent to carry a business as co-owners.

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15
Q

Partnership by Estoppel

A

One who represents to a third party that a general partnership exists will be liable, as if it actually does exist (even when it doesn’t).

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16
Q

General Partnerships

A

General partners hare equal rights and responsibilities in connection with the management of the business and any individual partners can bind the entire group to a legal obligation.

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17
Q

Contract Liability - Partnerships

A

Parnters are jointly and severally liable for all contracts entered into by a partner in the scope of the partnership business or with authority of the partnership.

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18
Q

Authority of Partners

A

All partners are agents of the partnership. Thus, the act of any partner for apparently carrying on in the ordinary course of the partnership business, binds the partnership unless the partner had no authority to act and the 3rd Party dealing with the partner had knowledge of that.

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19
Q

Types of Authority (Partnerships)

A

Actual, apparent, authority by ratification and agency by estoppel.

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20
Q

Actual Authority (Partnerships)

A

All partners can bind the partnership to any transaction for which they have actual authority to enter into which is the authority a partner reasonably believes he or she ahs based on the communications between the partnership and himself. This is an objective standard.

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21
Q

Types of Partnerships

A

1) General Partners, 2) Limited Partnerships, 3) Limited Liability Partnerships, 4) Registered Limited Liability Partnership

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22
Q

Express Actual Authority (Partnerships)

A

Occurs when the principal uses words to express authority to the agent to enter into the contract.

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23
Q

Implied Actual Authority (Partnerships)

A

Occurs when some conduct of the principal leads the agent to reasonably believe that he or she has authority to act on the principal’s behalf and that authority is reasonably necessary to carry out the objectives of the agency relationship.

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24
Q

Apparent authority (Partnerships)

A

Occurs when an agent appears to have authority and a third-party reasonably relies on this appearance. The belief must be reasonable.

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25
Q

Duty of Loyalty (Partnerships)

A

Partners may not engage in 1) self-dealing, 2) usurping partnership opportunities, 3) Making a secret/undisclosed profit at the partnership’s expense.

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26
Q

Breach of Loyalty Remedies (Partnerships)

A

The partnership may recover 1) losses caused by the breach, 2) may disgorge profits made by the breaching partner.

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27
Q

Knowledge and Notice to Third Parties (Partnerships)

A

A partnership will not be bound by any partner’s act if the partner lacked the actual authority to enter into the transaction and the third party with whom the partner dealt with either knew or received notification of such fact.

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28
Q

KNOWLEDGE element - Knowledge and Notice to Third Parties

A

Subjective knowledge of what the person actually knew.

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29
Q

NOTICE element - Knowledge and Notice to Third Parties

A

A notice is effective once it comes to a person’s attention.

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30
Q

Partners are Agents of the Partnership?

A

Yes- Partners are Agents of the Partnership.

You got this card right! Good job. You can quit for the day. Bar studies starts tomorrow.

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31
Q

The types of Partnership Property

A

There are two types: 1) Partnership Capital and Partnership Property

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32
Q

Partnership Capital

A

Money contributed by each partner for the purpose of carrying on the business side of the partnership. This becomes the share property fo the business.

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33
Q

Partnership Property

A

Includes everything the partnership owns such as capital property subsequently acquired that is either titled or untitled. A partner has no right to use partnership property for personal purposes.

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34
Q

Titled Property vs. Untitled Property (Partnerships)

A

Titled: Governed by RUPA. Refers to anything titled in partnerships name and evidenced in the instrument of the transfer.

Untitled: Governed by common law. Courts will assess whether this is separate property or partnership property obtained in the course of the partnership or improved with partnership funds.

Anything paid with partnership funds/credit is presumed to belong to partnership.

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35
Q

Transfer of Partnership Property

A

A partner may transfer partnership property held in the name of the partnership. Transfer must be made by named partners.

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36
Q

Distributions (Partnerships)

A

In a general partnership (unless in writing stating otherwise), partners equally share in the profits or losses of the business. In a Limited Partnership, distributions are made by the general and limited partners, in proportion to the value of each partners contribution.

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37
Q

Interests of Partners in a Partnership

A

Partnership interests include (all seperate headings):

  • Management
  • Partner account
  • Indemnification
  • Ability to inspect
  • Suing the partnership
  • Settlement upon Dissolution
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38
Q

Settlement upon Dissolution (Partnerships)

A

Upon dissolution, a partner is entitled to a settlement of his or her account.

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39
Q

Limitations on the interests of the partnership

A

Fiduciary Duties
Duty of Care
Breach of Duties Resulting in Profit
Assignment of Transferable Interest

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40
Q

Authority of Partners

A

All partners are agents of a partnership. Thus any partner act carrying on during the ordinary course of the partnership will bind the partnership UNLESS 1) the partner had no authority and 2) the third party had knowledge of that.

Actual
- All partners bind with actual authority they reasonably believe they have (objective standard)

Statement of authority
- An express grant of limitation. To be valid it must be filed with the secretary of the state.

Knowledge and Notice (third parties)
- No binding UNLESS 1) the partner had no authority and 2) the third party had knowledge of that.

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41
Q

Contract Liability (Partnerships)

A

Partners are joint and severally liable for all contracts entered into by a partner in the scope of the partnership.

NOTE: In an Limited Partnership a limited partner is not personally liable for an obligation of the limited partner solely by reason of being a limited partner.

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42
Q

Tort Liability (Partnerships)

A

Each partner is personally and individually liable for the entire amount of the partnership obligations. Contribution from other partners will be warranted when one partner pays more than his or her fair share of an obligation.

43
Q

Incoming and Outgoing Partners

A

Incoming and Outgoing partners have different exposure to liability than current partners.

Incoming: Not personally liable for obligations incurred by the partnership before the person became a partner.

Outgoing: Remains liable for obligations incurred by the partnership before that person became a partner.

44
Q

Dissociation Headings (Essay outline)

A

Dissolution: There are numerous ways a partnership can terminate or one partner can terminate their interest.

Disassociation
- Formal Disassociation
- Effects of Disassociation

Dissolution
- Effects of Disassociation

45
Q

Disassociation

A

Where a partner ceases to be associated in the carrying on of the business

46
Q

Formal Disassociation

A

happening of an agreed event, expulsion of the partner pursuant to an agreement by a unanimous vote where it would be unlawful to continue the business with the partner, by judicial decree, the partner’s bankruptcy, the partner’s death or incapacity to perform his or her duties, appointment of a receiver or termination of a business entity that is a partner. (ONLY DISCUSS THOSE THAT APPLY HERE).

47
Q

Dissolution

A

The formal end of an entire partnership and can be triggered when any of the following take place:
1) The occurrence of an event agreed to in a partnership agreement;
2) The occurrence of an event that makes it unlawful for it to continue;
3) The issuance of a judicial decree that the purpose of the partnership has been frustrated or it is not practical to carry on business;
4) Notification by any partner of an intent to withdraw in a partnership at will; and
5) In a partnership with a specific term, expiration of the term can trigger dissolution or within 90 days of the death of one partner, expression by at least half of the remaining partners to wind up and consent of the others to do so.

48
Q

Effects of Dissolution

A

A partner after dissolution will be bound by another partner’s acts if the act is appropriate for winding up the partnership or if the third party is doing business with the partner and had no reason to know of the dissolution.

(Note: If a partner files a notice of dissolution, third parties are deemed to have constructive notice after 90 days of filing).

49
Q

Agent Contractual Liability

A

A principal will be liable for any contract that is entered into by an agent, if the principal authorized that agent to enter into the contract.

50
Q

Actual Express Authority (Agent)

A

Principals may use words to express the grant of authority to the agent, even if the words were oral or in private. However, if the contract that is to be signed must be in writing (PER THE SOF), then the grant of authority must also be in writing.

Revocation (SUB-ISSUE TO EXPRESS AUTHORITY): Express Authority can be revoked by either the principal or agent unilaterally, or if the principal dies or becomes incapacitated unless s/he gives a durable power of attorney (written document expressing authority) with explicit survival language.

51
Q

Actual Implied Authority (Agent)

A

A principal may grant authority through his or her actions or circumstances. Agents have implied authority to do anything necessary to accomplish an expressly authorized task, anything customarily performed by a person with the agent’s title or position, or anything, which the agent believes to have been authorized from the principal’s prior acquiescence.
* In sum, anything based on necessity, custom or prior dealings.

52
Q

Apparent Authority (Agent)

A

Agents have apparent authority when the principal grants the appearance of authority on the agent and the third party reasonably relies on that appearance of authority. However, even if a principal has limited the authority, the principal will still be liable if the third party is unaware of the limitations (see LO p. 43).
* Note: If the agent continues to act on the principal’s behalf after the authority has ended, the principal will still be liable until a third

53
Q

Ratification

A

Even if an agency relationship did not exist, when an act or task transpired, the principal may be bound if he or she later validates the act by CONDUCT that approves the agent’s action.

Ratification cannot alter the terms of the contract. If alteration occurs, then there is no ratification.

Ratification Post Contract Formation Ratification can occur and authority can be granted after the contract has been entered, if:
a) Principal has knowledge of all material facts regarding the contract; and
b) Principal accepts its benefits.

54
Q

Agency by Estoppel

A

An agency relationship may be created when the principal acts such that third parties reasonably conclude that an agency relationship exists.

55
Q

Who Can Sue? (Agency Heading)

  • Third Party v. Principal
  • Third Party v. Agent or Principal
  • Principal v. Third Party
A

THIRD PARTY VS. PRINCIPAL The principal will be liable to the third party on the contract entered into by his or her agent if the agent had any valid authority to act (from any type of authority mentioned above).

THIRD PARTY VS. AGENT OR PRINCIPAL: Depends on disclosure of principal (ONLY DISCUSS WHICH ONE APPLIES).

Disclosed Principal - The principal will be liable when the third party knows the agent is working for the principal, and also knows who the principal is (i.e., the principal is disclosed). An exception is if the contract intends the agent to be responsible.
Is the PRINCIPAL Partially Disclosed, Fully Disclosed or Undisclosed (ONLY DISCUSS WHICH ONE APPLIES).

Partially Disclosed Principal - A principal whose existence is known, but identity is withheld. Namely, if the third party knows that their contact is an agent for another, but does not know the identity of the other (PRINCIPAL), both the principal and the agent are liable (at the choice of the third party).

Fully Disclosed Principal - An agent is not liable for any contracts s/he made on behalf of a fully disclosed principal.
Undisclosed Principal Neither identity nor existence is disclosed. The third party can recover from either the agent or the principal.

PRINCIPAL v. THIRD PARTY - When the principal is disclosed, only the principal (not the agent) may enforce the contract and hold the third party liable. If the principal is undisclosed or partially disclosed, either the principal or the agent can enforce the contract against the third party.

Note: The principal may not enforce the contract if there has been a fraudulent misrepresentation.

56
Q

Duties a Principal owes an agent

A

Duties imposed by contract
Reasonable Compensation
Reimbursement for Expenses
Cooperation
Indemnity of the Agent

57
Q

Respondeat Superior (Negligence Cause of Actions)

A

Generally, a principal will be vicariously liable for the torts committed by an agent. There must be (1) A principal-agent relationship; and, the tort must have been committed within the scope of that relationship.

SCOPE OF RELATIONSHIP The tort must have been committed within the scope of the employment relationship. The scope of the relationship is determined by whether the Agent’s actions were one they were hired to perform and if the tort occurred during a frolic or detour.

Normal Conduct If the agent’s conduct is of the kind the agent was hired to perform (for example, if it was in the job description), then more likely it will be within the scope of the agency.

58
Q

Frolic v. Detour

A

A Frolic is a new and independent journey apart from the task hired for. If an agent is on a ‘frolic’, then the principal is not vicariously liable.

Conversely, a Detour is a mere departure from an assigned task. If the agent is on a detour, the agent is within the scope of agency and principal will be vicariously liable.

59
Q

Vicarious Liability for Independent Contracts

A

An independent contractor is one who is entrusted to undertake a specific project, but who is left free to do the assigned work and to choose the method for accomplishing it. Since it isn’t possible for the principal to control the independent contractor’s performance, vicarious liability doesn’t apply for the torts of independent contractors.

60
Q

Vicarious Liability EXCEPTIONS for Independent Contracts

A

there are 4 main exceptions and a principal is liable for the torts of an independent contractor when the conduct involves the following (only discuss what applies, full IRAC for each):

a) Ultra-Hazardous Activities: If the independent contract involves ultra-hazardous activities, then the principal may be liable.

b) Estoppel: If the principal makes it appear as though the independent contractor is actually an agent, then the principal is estopped from denying an agency relationship exists.

c) Non-Delegable Duties: When the Principal has a non-delegable duty (such as a land-occupier having the duty to keep the land safe for business invitees) then any negligence by an independent contractor within the scope of that specific duty creates liability for the principal.

d) Hiring of Incompetent Independent Contractor: If Principal negligently hires an incompetent independent contractor, then the principal is liable to injured party for principal’s own negligence in hiring. If principal knowingly hires an incompetent independent contractor, the principal is liable for all of the independent contractor’s negligence.

61
Q

Duties an Agent owes to a Principal

A

Duty of Care
Duty to Follow Instructions
Duty of Loyalty
Duty of Communcations

62
Q

Principal’s remedy of breach of duties by agent

A

-Discharge the agent
- Contract actions such as recession or an action of disgorgement of profits
- Tort actions against the agent
- Equitable actions for an accounting
- Seek indemnity for liability to third parties by the agent’s wrongful actions beyond the agency scope and
- Withholding of compensation for intentional torts or breaches of fiduciary duty.

NOTE 1 - Only discuss the applicable remedies.
NOTE 2- The principal may recover the actual profits or properties held by the agent whether or not the agent’s profit has caused the principal by any loss.

63
Q

Limited Partnerships

A

Created where 1) there is a written agreement among the partners and 2) a formal document is filed with state officials.

Creates two types of partners 1) General and 2) Limited. Limited partners are not liable for the debts of the partnership beyond the amount they have contributed\
- Exception: If they actively participate in the management of the partnership then they lose the protection of being a limited partner.

64
Q

Piercing the Corporate Veil Examples

A

In extreme cases courts may pierce the corporate vale and hold some or all shareholders personally liable for the corporations debts.

1)
- Torts v. Contracts
- Fraud
- Inadequate Capitalization
- Zero Capital - Shareholder invests no money in Corp
- Siphoning - Initial funding is siphoned out as earned.

2)
Failure of Formalities: More likely to pierce the veil if shareholders have failed to follow corporate formalities.

65
Q

Shareholder Liability (Intro)

A

Under the principal of limited liability, shareholders are generally not personally liable for the debts of the corporation. However, there are three circumstances where one may pierce the corporate veil and find shareholder liability. (Alter Ego, Undercapitalization, Avoidance of Existing Obligations)

66
Q

Piercing the Corporate Veil

A

One may pierce the corporate veil to avoid fraud or unfairness. The three ways to expose shareholders to liability are: (1) Alter Ego; (2) Undercapitalization; (3) Avoidance of existing obligations.

67
Q

Alter Ego

A

Alter ego exists where there is a shareholder who has failed to observe sufficient corporate formalities.

68
Q

Undercapitalization

A

Shareholders who fail to maintain sufficient funds to cover foreseeable liabilities may be liable for undercapitalization.

69
Q

Avoidance of Existing Obligations

A

The corporate veil may be pierced where it is necessary to prevent fraud or to prevent an individual shareholder from using the entity to avoid its existing personal obligations.

70
Q

Directors and Officers: Duty of Care

A

A director/officer owes the corporation a duty of care, which is a fiduciary duty that requires a director to manage the corporation to the best of their ability. Thus, a director must act with (1) good faith; (2) As an ordinary prudent person would in the same or similar circumstances; (3) for the best interests of the corporation.

71
Q

Directors and Officers: Duty to Manage

A

Directors have the duty to manage the corporation. Directors may delegate management functions to a committee of one or more directors that recommends action to the Board of Directors.

72
Q

Business Judgment Rule

A

The Business Judgment Rule is a presumption that the directors manage the corporation in good faith and in the best interests of the corporation and its shareholders. As such, directors will not be liable for innocent mistakes of business judgment.

73
Q

Directors and Officers: Duty to Disclose

A

Directors have a duty to disclose material corporate information to other members of the Board of Directors.

74
Q

Directors and Officers: Doctrine of Waste

A

Directors have a duty not to waste corporate assets by overpaying for property or employment services.

75
Q

Directors and Officers: Duty of Loyalty

A

A director owed the corporation a duty of loyalty. A director may not receive an unfair benefit to the detriment of the corporation or its shareholders. There are three different types of breaches to the duty of loyalty: 1) Usuring corporate opportunities; 2) Interested director transactions; 3) Competing ventures.

76
Q

Usurping corporate opportunities

A

A corporate opportunity is usurped when a director receives an unfair benefit by usurping for himself an opportunity which the corporation would have pursued.

77
Q

Interested Director Transaction

A

An interested director transaction occurs when a director has a personal interest in a transaction in which the corporation is also a party.

78
Q

Exception to Interested Director Transaction

A

Interested director transaction will be upheld if 1) a majority of disinterested directors approve the transaction; 2) a majority of disinterested shareholders with voting power approve the transaction; and 3) the transaction was reasonably fair to the corporation.

79
Q

Competing Ventures

A

Under the duty of loyalty, directors are not permitted to engage in any personal business that is in direct conflict with the corporation.

80
Q

Promoter

A

Promoters are persons acting on behalf of a corporation not yet formed

81
Q

Promoter Liability

A

Promoter: A person who acts on behalf of corp knowing that it is not yet formed is jointly and severally liable for obligations incurred. This ends upon a valid novation.

Corporation: Corporation becomes liable when the corporation adopts the promoter’s pre-incorp contract through express adoption or implied adoption.

82
Q

Corporation Formation

A

To create a de jure corporation, the incorporators must comply with all applicable statutory requirements. Including the filing of an Articles of Incorporation.

83
Q

Articles of Incorporation Requirements

A

Must be Filed.
Must contain:
- Name of Corp
- Name and Addresses of Agents
- Number of Authorized Shares
- Statement of Purpose

84
Q

Ultra Vires Activity

A

If the Articles of Incorporation state a specific purpose and a director or officers depart from the purpose, the State and SH can sue corporation to enjoin the activity.

85
Q

Subscribers

A

Subscribers are persons or entities that make written offers to buy stock (“Subscription”) from a corporation that has not yet been formed.

Revocation: Under K law, offers to purchase pre-incorporation stock are revocable until acceptance. Under Corp law, offers are irrevocable for 6 months.

86
Q

Par Value of Stock

A

The value assigned to shares of stock, representing the minimum amount for which each share may be sold. A corporation may receive more than this value, but never less. Directors a liable for stock issued below par.

87
Q

Quorum

A

A majority vote of the board of directors constitutes a quorum.

88
Q

Indemnification of Directors and Officers

A

A corporation may indemnify a director/officer for reasonable expenses incurred in unsuccessfully defending a suit.

Exception:
- Director is held liable for receiving improper benefit

Corporation must always indemnify director/officer for successful suit

89
Q

SH Proxy

A
  1. Writing
  2. Signed by record owner SH
  3. Directing to secretary or corporation
  4. Authorizing another to vote the shares, and
  5. Valid for 11 months

Proxies are revocable unless labeled otherwise

90
Q

Direct Suit by SH

A

A suit by a SH to redress any injury sustained directly by them for which they are entitled to relief. (ie: right to inspect corporate books and records in good faith at reasonable times)

91
Q

Derivative Suit by SH

A

SH us suing to enforce the corporations own cause of action. Corporation is named as a defendant, but Corporation is entitled to recovery. (Can the corporation itself have brought this suit? If yes- derivative)

SH must have been stockholder at time claim arose.

92
Q

SH Demand for Derivative Suit

A

SH Demand made,
Reject by the board
90 days must pass since denial
Suit is in corporations best interest

93
Q

Voluntary Dissolution (Corp)

A

Corporation chooses to take action to dissolve by majority vote by directors and SH. Directors must file an articles of dissolution with state.

94
Q

Involuntary Dissolution

A

Judicial Dissolution based on fraud, ultra vires action, or a defective corporation

Administrative Dissolution based on fraud or abuse of authority.

95
Q

Federal Securities Law: 10(b)(5)

A

This rule prevents any person from using fraud or deception in the purchase or sale of any security by means of any instrumentality in interstate commerce.

Elements:
1. Fraudulent Conduct
2. In connection with purchase or sale of a security by P in interstate commerce
3. Use of a means of interstate commerce
4. Reliance
5. Damages

96
Q

Section 16(b) Short Swing Trading Profits

A

A director, officer, or SH owning more than 10% of a corporation must surrender any profit realized to the corporation from the re-sale or re-purchase of equity securities within a 6-month period when the corporation is (1) publicly traded on a national stock exchange or (2) has more than $10m in assets and at lease 2,000 SH

97
Q

Theories of Liability Under 10(b)(5)

A

Traditional Theory: Liability attaches to any person who discloses the material, non-public information or refrains from trading. These insiders have a fiduciary duty to abstain or disclose

Misappropriation Theory:

Tipper/Tipee Theory:

97
Q

Theories of Liability Under 10(b)(5)

A

Traditional Theory: Liability attaches to any person who discloses the material, non-public information or refrains from trading. These insiders have a fiduciary duty to abstain or disclose

Misappropriation Theory: Applies to outsiders (eavesdroppers/lawyers). This theory applies when the outsider breaches a Duty of Trust or Confidence owed to the source of the information and trades on the market.

Tipper/Tippee Theory: Applies to any individual who acquires material insider information as a result of an insider’s Breach of Duty, and this will be considered Insider Trading.

98
Q

Pooled or Block Voting

A

Shareholders can increase their influence by agreeing to vote alike. There are two ways to do this, voting trust or a shareholder agreement.

99
Q

Corporate Fundamental Changes

A

Fundamental Changes to the corporate business or structure must be approved by a majority shareholder vote. Typical procedure to make a fundamental change:
1) Board adopts a resolution
2) Written notice is given to shareholders (10-60 days before next shareholder mtg)
3) Shareholders approve the change by majority vote.
4) Change is updated in the articles filed with the state.

100
Q

Types of Fundamental Changes

A

1) Merger
2) Share exchange between corporations
3) Asset sales of a substantial amount
4) Conversion from corporation to another form
5) Dissolution / Winding Up

101
Q

Shareholder Agreement

A

SH Agreements allow SH to vote their shares together. Historically, these were not permitted and voting trusts were required. They are governed by modern contract principles.

102
Q

Voting Trust

A

A voting trust is a formal delegation of voting power to a voting trustee for ten years and thus requires: 1) a written trust agreement, 2) transfer of shares to voting trustee, 3) shareholders get trust certificates, 4) shareholders retain all rights except for voting.

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