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FL Bar Exam Flashcards- MBE > Business Associations - Corporations > Flashcards

Business Associations - Corporations Flashcards

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MBE flashcards
1
Q

Nature of Corporate Entity

A

separate from shareholders, may exercise rights through agents

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2
Q

Advantage of Corporate Form

A

(1) limited liability of shareholders (2) centralized management (3) continuity of existence (4) ease of transferring ownership (5) access to capital through sale of shares

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3
Q

Taxation

A

earnings to shareholders pay double tax

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4
Q

Small Business Tax Exception

A

Subchapter S of IRS Code, taxes income directly to shareholders in proportion to ownership

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5
Q

Corp Obligations to State

A

Must file an Annual Report

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6
Q

Annual Report Contents

A
  1. Corp Name
  2. Date of incorporation
  3. Address of principal office
  4. Federal employer ID #
  5. Names and business street addresses of its principal officers and directors
  6. Address of its registered office and name of its registered agent
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7
Q

Political Contributions

A

within limits to candidates, not as free as individuals

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8
Q

Corporate Liabilities

A

(1) contracts (2) torts committed by agency (3) punitive damages if intentionally or gross negligence

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9
Q

Ultra Vires Doctrine

A

defense by corporation ABOLISH but for (1) shareholder derivative suit against corp to enjoin performance (2) corp may sue officers to recover past acts

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10
Q

Articles of Incorporation MUST include

A

(1) name (2) # of shares (3) preemptive rights (4) registered office (5) registered agent (6) names and addresses of incorporators (7) address of principal office

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11
Q

Articles MAY include

A

(1) number of directors (2) par value (3) personal liability of shareholders (4) initial purpose (5) any other provisions

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12
Q

When does Corporation start existing?

A

Upon filing of articles of incorporation

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13
Q

Organizational Meeting

A

(1) 3 days notice (2) state time and place (3) can be waived with written consent

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14
Q

Bylaws

A

board of directions adopt initial bylaws unless otherwise said

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15
Q

De jure corporation

A

follow all mandatory requirements but not a corp

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16
Q

De facto incorporation

A

good faith attempt to follow but not enough to be a corp

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17
Q

Corporation by Estoppel

A

creates liability for people wronged by fake corps

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18
Q

Personal Liability for Defective Incorporation

A

all members personally liable

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19
Q

Piercing the Corporate Veil

A

court will disregard corp. status and hold active shareholders jointly and severally liable if (1) alter ego (2) thin capitalization (3) deep rock (4) subsidiary corp

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20
Q

Alter Ego Doctrine

A

corp is alter ego of shareholders and used as a conduit. FL law REQUIRES showing of improper conduct

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21
Q

Thin capitalization

A

a corp must have capital to meet reasonably foreseeable needs

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22
Q

Deep Rock Doctrine

A

in bankruptcy proceedings, capital contributions are loans

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23
Q

Subsidiary Corp

A

parent corp liable for debts if inadequately capitalized, intermingles, or not distinct

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24
Q

Common stock

A

voting or non-voting, representing the residual ownership of corp

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25
Q

Preferred stock

A

voting or non-voting, with a right to paid a fixed dividend ahead of common stock

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26
Q

Subscription Agreements

A

contract where subscriber agrees to purchase X amount of stock at a specified price. FL makes it IRREVOCABLE for 6 months

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27
Q

Consideration for Shares

A

FL allows promissory notes, cash, property, or promises amount determined by board

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28
Q

Shareholder Liability

A

may sue derisively if someone pays less than full consideration agreed

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29
Q

Doctrine of Equitable Contribution

A

all subscribers purchasing at the same time should pay same price

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30
Q

Securities Law

A

stocks and bonds must satisfy Securities Act of 1933

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31
Q

Non-exempt secutities

A

registration statement must be filed to SEC disclosing all material facts

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32
Q

Blue sky laws

A

impose standards governing the quality of securities sold, noes not require scienter, ONLY basis of relief if transaction has no IS commerce

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33
Q

Preemptive rights

A

shareholders have right to purchase new stock to maintain relative voting strength. In FL – NO EMPTIVE RIGHTS unless granted by articles, if granted may be waived

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34
Q

Repurchase of Shares Tests

A

(1) date money or other property is transferred or debt incurred by the corporation (2) the date the shareholder ceases to be a shareholder with respect to the squired shares

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35
Q

Financial Assets

A

UCC 8, FL adopted this, investment security may either certificated or uncertificated

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36
Q

Certificated Investment security

A

represented by an instrument issued in bearer or registered form

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37
Q

Uncertificated Investment Security

A

not represented by an instrument but registered on book maintained by the issuer

38
Q

Contract/Modification of Investment Security

A

not subject to SoF

39
Q

Issuer Defenses

A

limited, usually only if certificate issued is not genuine

40
Q

True Owner of Investment Security

A

may reclaim from anyone EXCEPT protected purchaser (think PMM)

41
Q

Restrictions on Transfer of Stock

A

enforced if REASONABLE

42
Q

Specific Facts Doctrine

A

insiders must disclose facts of an unusual nature. FL doesn’t hold anyone liable to the corp for personal profits realized in trading on the basis of inside info

43
Q

Federal Securities Law Section 16(b)

A

requires officers, directors, and 10% shareholders return to their corporation all profits from any purchase of shares within a SIX MONTH PERIOD

44
Q

Publicly held Corp

A

(1) at least 2000 shareholders/500 not accredited investors and (2) $10 million in assets

45
Q

Accredited Investors

A

include high income or net worth individuals and officers or directors of the issue

46
Q

Rule 10b-5

A

(1) prohibits fraud and deceit (2) in connection with purchase or sale of any security (3) subject to min nexus with IS commerce (4) and a showing of scienter. Issue is adequate disclosure

47
Q

Insider Trading Sanctions

A

SEC may sue persons illegally trading on the basis of insider information for an amount equal to three times their profit or loss avoided

48
Q

Tender offers

A

public invitation to shareholders to sell their shares in the targeted corp, at premium over the market price

49
Q

Williams Act

A

imposes anti-fraud and disclosure requirements on all tender offers involving more than 5% of a target’s stock

50
Q

Promoter

A

undertakes to corm a corp and procure the necessary capital and other items

51
Q

Incorporator

A

one who signs the articles of incorporation

52
Q

Fiduciary Duty

A

must act in good faith and best interest of all investors

53
Q

Contracts on Behalf of Corp

A

promoters remain liable on contracts they enter on behalf of corp, even after corp adopts K, promoter always personally liable unless novation

54
Q

Expenses, Compensation, and Failure to Incorporate

A

promoter has NO right of action to recover, only for reasonable value of services rendered. If corp not formed – must return all money even if no wrong doing

55
Q

Shareholder Powers

A

do not have power to control day-to-day management, but may given powers via articles

56
Q

Shareholder Annual Meeting

A

must be held for election of director and other business, must be at least once w/13 months or shareholder may petition court

57
Q

Shareholder Special Meetings

A

may be called for any appropriate purpose by board, holders of 1/10th of all outstanding voting shares. (1) must be notified in writing (2) need to know purpose (3) need 10 days in advance notice

58
Q

Shareholder Voting

A

eligibility is determined by stock ownership of the record date, no more than 70 days before meeting

59
Q

Shareholder Proxies

A

(1) may be appointed upon signing a form. (2) expires after 11 months unless stated otherwise. (3) revocable at pleasure of shareholder unless provided irrevocable.

60
Q

Election of Directors

A

plurality vote unless articles state otherwise

61
Q

Cumulative Voting

A

intended to aid minority shareholders in obtaining representation on board. Entitled to a number of votes= # of voting shares X # of directors. May cast votes for any one candidate or divide them

62
Q

Shareholder rights to Dividends

A

shareholders cannot compel directors or declare dividends. Directors has discretion absent bad faith

63
Q

Legality of Distribution Equity Test

A

distribution okay if corp will be able to pay its debts

64
Q

Legality of Distribution - Balance Sheet or Bankruptcy Test

A

limited to amount by which total assets exceed the sum of total liabilities and liquidation preferences of preferred shares

65
Q

Liability for Improper Dividends

A

Directors are liable for improperly paid amounts, Fl does not insulate directors from liability

66
Q

Right to Inspect Books and Records

A

(1) absolute (2) for proper purpose

67
Q

Grounds of Refusal of Inspection

A

(1) w/2 years offered a sale of list of shareholders of any corp or aided and abetted another (2) has improperly used any info secured through any prior examination of books (3) not acting in good faith (3) no proper purpose

68
Q

Voting Trust

A

to irrevocably confer upon a trustee the right to vote their shares

69
Q

Pooling Agreement

A

shareholders agree to share the shares a certain way

70
Q

Close corporation Shareholder Agreement

A

authorizes to close corporations in range of agreement, will not hold them invalid, only applies when all shareholders consent

71
Q

Fiduciary Duty of Shareholders

A

none, may act in personal interest. May not used power to defraud or oppress the minority

72
Q

Shareholder Derivative Suits

A

enforce a corporate cause of action when BoD has not sought to enforce the corp’s rights

73
Q

Dismissal of Shareholder Derivative Suit

A
  1. Majority vote if independent directs 2. Majority vote of a committee 3. Panel of one or more individual persons appointed by the court
74
Q

Board of Directors Removal

A

At any time with or without cause

75
Q

Director and binding on extraordinary contracts

A

Cannnot unless authority to act: 1. Proper notice at directors meeting 2. Quorum 3. Makority directirs approved decision

76
Q

Business Judgement Rule

A

Not personally liable to corp for breach of care. Standard is ordinarily prudent person

77
Q

Invested Director

A

Okay as long as full disclosure of interest and approved by majority or K is fair

78
Q

Corporate Opportunity Doctrine

A

Must inform the corp of business opportunities of which to take advantage

79
Q

Fundamental corporate change voting

A

Majority of outstanding shares

80
Q

Regular issue and shareholder voting

A

Quorum of majority votes cast at a meeting

81
Q

Merger

A

One of the combining corporations remains in being and absorbs the other

82
Q

Share exchange

A

1 corp acquires all of the outstanding shares of one or more of classes or series of another corp

83
Q

Short form merger

A

Merging of a parents and a subsidiary of at least 80% owned by the parent and does not require shareholder approval

84
Q

De facto merger

A

FL has no case law accepting or rejecting de facto merger

85
Q

Appraisal rights not available to

A

Shares traded on national securities exchange OR has at least 2000 shareholders and the outstanding shares or class has a market value if at least $10 million

86
Q

Dissolution

A

Legal termination of corp

87
Q

Liquidation

A

Process of marshaling corps’ assets

88
Q

Voluntary dissolution

A

Notice must be given to all known creditors. In FL not filed until the liquidation has been conpleted

89
Q

Involuntary Dissolution

A

1) irreparable injury or 2) shareholders at deadlick

90
Q

Shareholders bringing involuntary dissolution

A

1) waste or misappropriation OR 2) directors acted illegally or fraudulently

FL Bar Exam Flashcards- MBE (20 decks)

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