Business Associations Intro Cards Flashcards
1
Q
The field of _______ ________ encompasses the law governing people who come together in groups to do business. It includes (ii) ________ and (iii) ______ ______, such as partnerships and limited liability corporations.
A
(i) business associations; (ii) corporations; (iii) unincorporated associations
2
Q
An (i) _____ acts on behalf of or in place of another. A (ii) ____ is the person for whom the (iii) _____ acts.
A
(i) agent; (ii) principal; (iii) agent
3
Q
An agency relationship may be established by (i) _____ _____ or by (ii) _______ of ____.
A
(i) mutual assent; (ii) operation of law
4
Q
To be a (i) ________ in an agency relationship, a person must have the capacity to (ii) _____ _______ rights and (iii) ______ ______ obligations (e.g., contract).
A
(i) principal; (ii) incur binding; (ii) incur binding
5
Q
Virtually anyone can be an (i) _____ in an agency relationship
A
(i) agent
6
Q
(i) ______ is the agent’s ability to affect the (ii) _______’s legal relationships with third parties or otherwise take actions that have (iii) ______ __________ for the (iv) ______
A
(i) authority; (ii) principal’s; (iii) legal consequences; (iv) principal
7
Q
An agent has (i) _____ _______ if the principal (ii) _____ _______, orally or in (iii) _______, that the agent may take action on the principal’s behalf.
A
(i) express authority; (ii) specifically states; (iii) writing
8
Q
An agent has (i) ___ ______ if it is not (ii) _____ ______, but (iii) _____ _____ from the principal’s conduct.
A
(i) implied authority; (ii) expressly granted; (iii) reasonably inferred
9
Q
(i) ______ authority is the authority that may be (ii) ____ _____ from the (iii) ______ of the particularly agency relationship or the position the agent holds.
A
(i) inherent; (ii) reasonably inferred; (iii) nature
10
Q
(i) _____ authority exists, if based on the principal’s (ii) ________ and _______, a third party could (iii) ____ _____ that the agent has actual authority. Agency by (iv) _____ is similar to (iv) _____ authority.
A
(i) apparent; (ii) conduct and manifestations; (iii) reasonably believe; (iv) estoppel; (v) apparent
11
Q
(i) ________ occurs if a principal, after the fact and fully knowing all the material facts, (ii) ________ _______ that the agent’s acts will bind him.
A
(i) ratification; (ii) manifests assent
12
Q
A (i) ______ and an (ii) _____ may be liable for contract the (iii) ___ enters, or for an agent’s (iv) _____ committed with the (v) _____ of ______.
A
(i) principal; (ii) agent; (iii) agent; (iv) tort; (v) scope of agency
13
Q
An agent and a principal may be liable to (i) ___ ______ for any (ii) _____ the agent enters on the principal’s behalf. Liability may depend on whether the principal is (iii) _______, ________, or ________.
A
(i) third parties; (ii) contracts; (iii) disclosed, unidentified, or undisclosed
14
Q
An agent is liable to a (i) ____ _______ harmed by the agent’s own (ii) ______ _______, regardless of whether the agent acts with any type of authority. A principal may be (iii) ______ liable to a (iv) ____ ____ harmed by an agent’s (v) ____ ______ done within the scope of authority. A principal may be (vi) ________ liable under the doctrine of (vii) ______ _______ if the agency relationship is a (viii) _____-________ relationship, and the agent commits the tort within the (ix) _______ of _____.
A
(i) third party; (ii) tortious donut; (iii) directly; (iv) third party; (v) tortuous conduct; (vi) vicariously; (vii) respondent superiur; (viii) master-servant; (ix) scope of employment
15
Q
Agents must fulfill a variety of _______ obligations in acting on behalf of principals.
A
Fiduciary
16
Q
An agent’s fiduciary duties to a principal include: (i) ____, (i) ______, and (iii) _____.
A
(i) loyalty; (ii) obedience; (iii) care
17
Q
If a principal and agent’s interest conflict, the agent must (i) _________ his interest to the principal’s. This is the duty of (ii) ________.
A
(i) subordinate; (ii) loyalty
18
Q
The duty of (i) ________ requires the agent to: act (ii) _______ within the scope of the agent’s (iii) ______ ______; comply with the principal’s (iv) ______ _________ in all acts or transactions on the principal’s behalf; and (v) ______ by the terms of (vi) _____ with the principal.
A
(i) obedience; (ii) solely; (iiii) actual authority; (iv) lawful instructions; (v) abide; (vi) contract
19
Q
The duty of (i) ______ requires that the agent act as (ii) _______, _______, and _______ as a normal, reasonable agent in (iii) ________ __________. This includes safeguarding the principal’s property, accounting for expenditures, and proving relevant information.
A
(i) care; (ii) diligently, carefully, and competently; (iii) similar circumstances
20
Q
A principal owes the duties of (i) ____ ______ and (ii) _____ to the agent and must observe the (iii) _____ and (iv) ______ terms of (v) _______ with the agent.
A
(i) good faith; (ii) indemnity; (iii) express; (iv) implied; (v) contract
21
Q
The principal must deal with the agent (i) ______ and avoid doing anything that might (ii) _____ ________ ____ the agent without fault on the agent’s part. This is the principal’s duty of (iii) _____ _____.
A
(i) fairly; and (ii) reasonably foreseeable harm; (iii) good faith
22
Q
A principal must compensate the agent for (i) ___, (ii) ______, or (iii) _______ incurred while acting as an agent. This is the duty of (iv) ______.
A
(i) hurt; (ii) loss; (iii) damage; (iv) indemnity
23
Q
A (i) __________ is an association of two or more persons or entities carrying on as co-owners of a business for (ii) ______.
A
(i) partnership; (ii) profit
24
Q
A (i) _______ ________ is distinct from its constituent (ii) ________, but it is not a (ii) _____ person in the same sense as a corporation
A
(i) general partnership; (ii) partners; (iii) juridical
25
If two or more persons come together as (i) __-_____ of a business for profit, and no other type of association is legally formed, a (ii) _____ _________ is formed by default.
(i) co-owners; (ii) general partnership
26
Within a (i) _____ _________, persons who qualify as (ii) _______ are those who have a right to receive a (iii) _____ of the ________ and participate in (iv) ______ and _________ the business. A (v) ______ may also contribute (vi) ______.
(i) general partnership; (ii) partners; (iii) share of the profits; (iv) controlling and managing; (v) partner; (vi) capital
27
The types of general partnership include: (i) partnership __ ______ (where ________ is not find by the terms of the agreement); partnership for a _____ _____; and partnership for a _______ ________ or ____ _______, which exists for a discrete project
(i) at will, duration; (ii) definite term; (iii) particular undertaking, joint venture
28
Partners may enter into a (i) ______ ________ via (ii) ____, _____, or _______ (iii) ______, but no such (iv) ______ _______ is always necessary to form a partnership.
(i) partnership agreement; (ii) oral, written, or implied (iii) contract; (iv) partnership agreement
29
In a general partnership, partners are (i) _______ liable for partnership obligations, whether (ii) ____ or (iii) ____.
(i) personally; (ii) contract; (iii) tort
30
If a partner's act is (i) _______ for (ii) _______ on the (iii) ________'s ________ in its (iv) ______ ______, then the act binds the partnership.
(i) apparently; (ii) carrying; (iii) partnership's business; (iv) ordinary course
31
A general partnership may (i) ____ and be (ii) _____ in its own name. A general partnership and the partners themselves are (iii) ______ for harm arising from the partners' (iv) ______ and other wrongful acts committed with (v) _______ ______ or in the (vi) _____ _____ of the partnership's business.
(i) sue; (ii) sued; (iii) liable; (iv) torts; (v) actual authority; (vi) ordinary course
32
Typically, partners in a partnership are ______ and ______ liable for obligations.
Jointly and severally
33
Partners owe (i) _____ ______ to each other, including (ii) _____ and (iii) ______. A partner must not: deal with the partnership as an (iv) ____ ______; use or (v) _____ the partnership's (vi) _____ ________; (vii) ____ with the partnership in the conduct of its business; (vii) or _____ a partnership opportunity.
(i) fiduciary duties; (ii) care; (iii) loyalty; (iv) adverse party; (v) exploit; (vi) confidential information; (vii) compete; (viii) appropriate
34
A partner may transact with the general partnership in his (i) ____ _______ as if he were a (ii) _____ _______. But, if the partner derives any (iii) ______ _______ from carrying on or winding up the business, he must (iv) _____ the ______ to the (v) _______.
(i) individual capacity; (ii) third party; (iii) personal benefit; (iv) relinquish the benefit; (v) partnership
35
The partner's fiduciary duty of (i) ____ holds that the partner must refrain from (ii) ____ ______ or (iii) _____ conduct, (iv) __________ misconduct, or a (v) ____ _____ of law related to partnership business. A partnership may (vi) ____ eliminate the duties of (vii) _____, ___, or ___ _____ and ___ ____, though it may modify the duties in some cases.
(i) care; (ii) grossly negligent; (iii) reckless; (iv) intentional; (v) knowing violation; (vi) not; (vii) loyalty, care, or good faith and fair dealing
36
A general partnership may own (i) ____ in its name. (ii) _____ owned by the partnership is not individual property. A partner may use or possess the (iii) _____, but only on the partnership's behalf.
(i) property; (ii) property; (iii) property
37
Each partner has (i) _____ rights in the (ii) _______ and ______ of the partnership. Generally, a partner is not entitled to (iii) ________ for (iv) _____ _______ to the partnership.
(i) equal; (ii) management and conduct; (iii) compensation; (iv) services rendered
38
Subject to the (i) _______ ________, each partner is entitled to a (ii) ________ of the partnership (iii) ______ and has the right to receive (iv) __________ from the partnership. Each partner must share in the partnership (v) ___________ in proportion to his share of the (vi) _______. These rules apply without regard to (vii) ______ _______.
(i) partnership agreement; (ii) share; (iii) profits; (iv) distributions; (v) losses; (vi) profits; (vii) capital contributions
39
Each partner is entitled to review the partnership's (i) _____ and _____ during (ii) ______ _______ ____. The (iii) ____ and ____ must be kept at the partnership's (iv) _____ _____ ______.
(i) books and records; (ii) normal business hours; (iii) books and records; (iv) chief executive offices
40
(i) _________ from a partnership means that a partner ceases to be a partner
Disassociation
41
In most states, a partner may (i) ________ by his (ii) _____ withdrawal, and (iii) _____ set forth in the (iv) _____ _______, his (v) __________, his (vi) _____ _____, such as bankruptcy, or his (vii) ______ or _____.
(i) disassociate; (ii) volitional; (iii) events; (iv) partnership agreement; (v) expulsion; (vi) financial distress; (vii) death or incapacity
42
A (i) _____ partner is no longer a partner but may owe certain duties and exercise certain rights toward the partnership, including the (ii) _______ duties of (iii) ____ and _______ regarding matters prior to his (iv) _______.
(i) disassociated; (ii) fiduciary; (iii) loyalty and care; (iv) disassociation
43
If a (i) _________ event occurs, the partnership (ii) _____-___ and (iii) _______. Termination does not affect liability for obligations.
(i) dissolution; (ii) winds-up; (iii) terminates
44
Events that can cause the dissolution of a partnership include: (i) a partner's ________ in a partnership (ii) __ _____; dissolution related to partnership for a (iii) ____ ______; an event specified in the (iv) ____ _______; (v) the partner's business becoming (vi) _______; or (vii) ___ _____ upon application by a partner or transferee
(i) withdrawal; (ii) at will; (iii) definite term: (iv) partnership agreement; (v) illegal; (vi) judicial dissolution
45
The process of winding-up a general partnership includes: (i) ________ and ________ actions and proceedings; (ii) _______ and ________ the partnership business; (iii) ________ of and ________ partnership property; (iv) discharging partnership ___________; (v) distribution of _________ to the ________; (vi) ______ _______ regarding the partnership.
(i) prosecuting and defending; (ii) settling and closing; (iii) disposing of and transferring; (iv) liability; (v) assets, partners; (vi) settling disputes
46
In winding-up, partners may not enter into any (i) ____ ________ or engaging in (ii) ____ ______; they are limited to (iii) ____ _______.
(i) new transactions; (ii) new business; (iii) old business
47
If a partnership winds-up and its assets are insufficient to satisfy its liabilities, (i) ___ _____ must (ii) _________ to the deficiency in (iii) _______ to his share of the partnership (iv) _______.
(i) each partner; (ii) contribute; (iii) proportion; (iv) losses
48
A (i) _______ partnership contains at least one general partner and at least one (ii) _______ partner, formed in compliance with state statute.
(i) limited; (ii) limited
49
To form a limited partnership, a (i) _______ of _______ partnership must be filed with the state's office for (ii) ____ ____________, usually the (iii) _______ of _____.
(i) certificate of limited; (iii) business organization; (iii) secretary of state
50
A (i) ________ partner in a limited partnership has the same (ii) _____ and ______ as a partner in a general partnership, with (iii) _______ _____ owed to the limited partners and the partnership largely paralleling responsibilities in a general partnership. A (iv) _______ partner participates in the (v) ________ and _______ of the partnership business and is (vi) _______ and ______ ______ for obligations.
(i) general; (ii) rights and duties; (iii) fiduciary duties; (iv) general; (v) management and conduct; (vi) jointly and severally liable
51
A (i) ________ partner contributes (ii) _______ in exchange for an (iii) _________ _______ in the limited partnership, and typically does not participate in (iv) _______ the business. If a limited partner participates in (v) __________ the business, he may be liable for obligations as a (vi) _______ ________. A (vii) ______ partner may have the right to (viii) ______ on certain matters and (ix) ________ partnership (x) _______.
(i) limited; (ii) capital; (iii) ownership stake; (iv) controlling; (v) controlling; (vi) general partner; (vii) limited; (viii) vote; (ix) inspect; (x) recrods
52
In a limited partnership, the (i) _____ ______ governments the parties' rights to (ii) ________.
(i) partnership agreement; (ii) distributions
53
A (i) _________ partnership may be (ii) _____, _____-__, and terminated the same as a general partnership.
(i) limited; (ii) dissolved, wound-up
54
A limited partnership may dissolve: at a time specified in the (i) ___________ of _________ partnership or specified by the (ii) _________ ________; or by the (iii) ______ of the (iv) ________; or upon the (v) _______ of the general partner; or by (vi) _____ _______; or by filing a (vii) _________ of ________ with the (viii) ________ of _____.
(i) certificate of limited; (ii) partnership agreement; (iii) consent of the (iv) partners; (v) disassociation; (vi) judicial action; (vii) certificate of dissolution; (viii) secretary of state
55
Termination of a (i) ________ partnership does not occur until the business is (ii) ____ ____. The rules regarding distribution of (iii) ________ and the general partner's obligation to (iv) ______ ________ in excess of (v) ______ largely are the same as those governing general partnership.
(i) limited; (ii) wound-up; (iii) assets; (iv) satisfy obligations; (v) assets
56
A (i) _______ ________ partnership is one that has obtained approval from the (ii) ______ and filed with the (iii) ________ of ______. In an (iv) _______, partnership are not (v) _____ ________ for obligations to (vi) _____ _______ solely due to their status as partners.
(i) limited liability; (ii) partners; (iii) Secretary of State; (iv) LLP; (v) personally liable; (vi) third parties
57
A (i) _____ is a (ii) ____ ______, meaning it is a legal entity distinct from its owners, (iii) ________, and (iv) ______, formed under the laws of a state.
(i) corporation; (ii) juridical person; (iii) directors; (iv) managers
58
Hallmarks of the (i) _______ form are the separation of (ii) _________ and (iii) _______ and (iv) _______ ____ for (v) _______, directors, managers, and employees
(i) corporate; (ii) ownership; (iii) control; (iv) limited liability; (v) shareholders
59
A corporation's shareholders generally are (i) __ _____ for the corporation's (ii) ____ or (iii) ______ beyond their (iv) _____ ______ or the cost to acquire their share.
(i) not liable; (ii) acts; (iii) debts; (iv) capital contribution
60
Under the doctrine of (i) ________ _________, corporations are separate, distinct (ii) _____ _______ with many rights and duties of natural persons. Corporations may own (iii) _______, enter (iv) _______, claim (v) _______ ___________, make (vi) _____ _____, and (vii) ____ and be ______.
(i) corporate personhood; (ii) legal entities; (iii) property; (iv) contracts; (v) constitutional rights; (vi) political contributions; (vii) sue and be sued.
61
Typically, a corporation is composed of a (i) ____ of ______, (ii) __________, (iii) _______, and (iv) ________.
(i) board of directors; (ii) officers; (iii) shareholders; and (iv) employees
62
A corporation's (i) ________ __ _______ is entrusted with the control of the corporation.
(i) board of directors
63
A corporation's (i) _________ are entrusted with daily administration
(i) officers
64
A corporation's (i) _________ own, but do not manage, the corporation.
(i) shareholders
65
A corporation must have a (i) ______ _______, stated in its (ii) _______ of ________.
(i) lawful purpose; (ii) articles of incorporation
66
A corporation may be founded by filing (i) _______ __ _______ with the (ii) ______ __ ______ (generally). The corporation's (iii) ________ then adopt (iv) ________ to manage the business.
(i) certificate of incorporation; (ii) Secretary of State; (iii) directors; (iv) bylaws
67
If (i) _______ corporation owns a (ii) ______ _______ (usually a majority) of stock in another corporate, that corporation is a (iii) _________.
(i) parent; (ii) controlling percentage; (iii) subsidiary
68
A (i) _______ corporation is a corporation in any state other than one in which it is (ii) _________. Generally, a (iii) _______ corporation must register with the (iv) ______ __ ______.
(i) foreign; (ii) incorporated; (iii) foreign; (iv) secretary of state
69
Courts may (i) ________ __ _______ _____ by setting aside the principles of (ii) ____ -_____ and disregarding the corporate entity in the interests of (iii) ______.
(i) pierce the corporate veil; (ii) limited-liability; (iii) equity.
70
Courts will generally only (i) ____ ___ _______ ____ if the corporate form has been abused, to cheat (ii) ______, through such acts as the (iii) ________ of shareholder and corporate (iv) ______, by severely (v) ________ the corporation, by manipulating its (vi) ________ and _________, or by using the corporate form to facilitate (vii) ____ or _____.
(i) pierce the corporate veil; (ii) creditors; (iii) commingling; (iv) assets; (v) undercapitalizing; (vi) assets and liabilities; (vii) crime or fraud.
71
Corporations have the power to: (i) _____ and be _____; make and amend (ii) ______; acquire, hold, or dispose of (iii) __________; make (iv) _________, incur _______, and secure __________; (v) ______ and invest; be a (vi) ______ in a different association; (vii) donate to _______; and (vii) _______ and hire _____, _______, and ______.
(i) sue and be sued; (ii) bylaws; (iii) property; (iv) make contracts, incur debts, and secure obligations; (v) lend; (vi) partner; (vii) charity; (viii) appoint, directors, officers, and employees.
72
The ownership of the corporation is divided into (i) _____ __ _______, represented by (ii) ______ _______.
(i) shares of stock; (ii) transferrable certificates
73
(i) _______ stock is the stock issue by corporation under its authority
(i) capital
74
(i) ________ stock entitles a shareholder to receive (ii) ______ from profits and to (iii) _____ on corporate matters
(i) common; (ii) dividend; (iii) vote
75
(i) ________ stock entitles shareholders to receive (ii) _______ before common stockholders, and typically have no (iii) _______ rights.
(i) preferred; (ii) dividends; (iii) voting
76
A (i) _______ is a pre-incorporation agreement to buy shares in a corporation once it is formed.
(i) subscription.
77
After incorporation, the board of directors may cause the corporation to issue new shares of stock in exchange for (i) _______, (ii) _______ _____.
(i) consideration; (ii) return value.
78
In a few states, corporations are compelled to set a (i) _____ value, called the (ii) ____ ______, below which newly issued shares may (iii) ____ ___ _______. Newly issued stock less than (iv) ___ ______ is called (v) ___ _____.
(i) monetary; (ii) par value; (iii) not issue stock; (iv) par value; (v) water stock
79
A (i) _______ right is the (ii) _______'s right to buy a percentage of newly issued stock equal to the (iii) _______'s current percentage ownership
(i) preemptive; (ii) shareholder's; (iii) shareholder's
80
Shareholder's ability to (i) _________ their stock may be limited to legal restriction or restrictions in the (ii) ______ ___ _______, (iii) _______, or other agreement.
(i) transfer; (ii) articles of incorporation; (iii) bylaws
81
A corporation may (i) ________ its own outstanding shares, usually at (ii) _____ ______, to increase the amount of stock it owns, to reissue stock for (iii) ______, or as a preliminary step to (iv) ______-_______. (v) _________ shares are called (vi) _________ shares.
(I) reacquire; (ii) market prices; (iii) capital; (iv) going-private; (v) reacquired; (vi) treasury
82
Debt securities are called (i) ______. A (ii) _______ represents a debt owing from the (iii) ________ to the holder. (iv) _______ are typically backed by a (v) _______, _______ or other interest in the property. Types of (vi) ______ included: bearer, registered, mortgage, convertible, debentures, and guaranteed debt securities.
(i) bond; (ii) bond; (iii) corporation; (iv) bonds; (v) mortgage, lien; (vi) bonds
83
A (i) _______ is a stock (ii) ______, an agreement between the corporation and the (iii) ______-holder that the holder may purchase stock at that (iv) ____.
(i) warrant; (ii) option; (iii) option; (iv) price
84
Every corporation must have a (i) ______ __ ________ with at least (ii) ____ _______, unless the shareholders agree (iii) ________ to (iv) _____ the requirement.
(i) board of directors; (ii) one member; (iii) unanimously; (iv) waive
85
All (i) _________ _____ must be exercised by the board of directors under its (ii) _______, and all (iii) ___________ ______ must be managed by the board and subject to its oversight.
(i) corporate power; (ii) authority; (iii) corporate affairs
86
The (i) _______ __ ________ and (ii) ______ prescribe the qualifications a person must meet to be a (iii) ______.
(i) articles of incorporation; (ii) bylaws; (iii) director
87
The (i) ______ ___ _________ is typically elected (ii) __________ at the (iii) ________'s meeting. The corporation may set (iv) ______ for directors, specify the number of directors, or provide for a (v) _______ (______) board.
(i) board of directors; (ii) annually; (iii) shareholder's; (iv) terms; (v) staggered (classified)
88
Typically, the (i) ______ __ _______ must act at a (ii) ______, either a regular (iii) ______ or a special (iv) ______. If there is a (v) _______, then an affirmative vote of the majority of the board of directors will constitute an act for the entire board of directors. A corporation's board may act by (vi) _____ _____ without a meeting. A board may delegate its power to a (vii) _______ of _______.
(i) board of directors; (ii) meeting; (iii); (iv) meeting; (v) quorum; (vi) unanimous consent; (vii) committee of directors.
89
A director's ________ ________ is to act in (ii) __ ___ and in a manner the director (iii) _____ __________ to be in the (iv) ____ ________ of the (v) ________, its businesses, and its (vi) _________.
(i) fiduciary duty; (ii) good faith; (iii) reasonably believes; (iv) best interest; (v) corporation; (vi) shareholders
90
The (i) ______ __ ______ holds that a director must discharge his duties with the (ii) _____ __ ______ that a (iii) ______ _____ in the (iv) _____ _____ would deem appropriate under the (v) _________. This requires directors to make (vi) _______ ________ and to actively (vi) _______ the corporation's affairs.
(i) duty of care; (ii) degree of care; (iii) reasonable person; (iv) same position; (v) circumstances; (vi) informed decisions; (vii) monitor
91
If a director is sued for a bad decision that allegedly breached the duty of care, a court will (i) _______ _____ that the director acted in (ii) _____ _____, upon (iii) _______ _____, and in the (iv) _______ _____ that the act was in the corporation's _____ ______. It is the plaintiff's burden to prove otherwise.
(i) rebuttable presume; (ii) good faith; (iii) reasonable information; (iv) honest belief; (v) best interests
92
If a director knows (i) ____ _______ to the other director's (ii) _____, and that the other directors are unaware of the (iii) _______, the director has a (iv) _____ __ _______ to (v) ________ the facts.
(i) facts material; (ii) duties; (iii) facts; (iv) duty of candor; (v) disclose
93
Directors must put the interests of the corporation and the shareholders ahead of their own; this is the (i) ______ __ _____. Directors must avoid (ii) _____ __ _____ and must not take (iii) _____ _______ of business (iv) _______ that should be offered to the (v) ________.
(i) duty of loyalty; (ii) conflicts of interest; (iii) personal advantage; (iv) opportunities; (v) corporation
94
A corporation may be permitted, or required, to (i) _______ a director for (ii) _______ arising out of (iii) __________ brought against the (iv) _____ __ _______. A corporation may also (v) _______ the director (vi) ______ to pay reasonable expenses incurred in litigation defense.
(i) indemnify; (ii) losses; (iii) litigation; (iv) board of directors; (v) advance; (vi) funds
95
Every corporation must have (i) _______, entrusted with the daily operations of the corporation. The (ii) _____ __ _______ appoints (iii) ______, and may also (iv) _____ them. An officer owes the same (v) ______ duties to the corporation and its shareholders that a (vi) ______ would owe.
(i) officers; (ii) board of directors; (iii) officers; (iv) remove; (v) fiduciary; (vi) director
96
Generally, (i) _______ and (ii) ______ are *not* (iii) _______ liable for corporation obligations.
(i) directors; (ii) officers; (iii) personally
97
Typical shareholder rights include the right to (i) _____ at (ii) _______ meetings, to (iii) ______ directors, to approve or disapprove of corporate changes, to receive (iv) ______ and ________, and to (v) ____ the corporation books and (vi) _____.
(i) vote; (ii) annual; (iii) elect; (iv) distributions and dividends; (v) inspect; (vi) records
98
Each corporation *must* hold at least one (i) _____ meeting, to (ii) ______ _________. It may also hold special meetings.
(i) annual; (ii) elect directors
99
Voting for directors can take many forms. In (i) ______ voting, each share eligible to vote may be voted in favor of one candidate for each directorship up for election. In (ii) ______ voting, a shareholder may multiply the number of shares he owns by the number of (iii) _____ open.
(i) straight; (ii) cumulative; (iii) seats
100
The board of directors has the authority to declare (i) _____ to shareholders. A (ii) _______ can be in (iii) _____ or other (iv) _______. Examples of (v) ______ include (vi) ______, stock _________ or _______, and _______ dividends.
(i) distributions; (ii) distribution; (iii) cash; (iv) property; (v) distributions; (vi) dividends, stock repurchases or redemptions, and liquidation dividends.
101
If a shareholder (i) _______ from an (ii) _________ corporate action that will fundamentally change the existence or nature of his share, he may seek the right of (iii) _________. The right of (iv) ________ compels the corporation to (v) ___-______ the stock at an (vi) _______ or (vii) _______ determined (viii) ____ ____ _____. Actions that may trigger (ix) ________ rights include: (x) ______; (xi) share ______; (xii) _______ sales; and (xiii) changes to the _____ of ______ implementing a (xiv) _____ ______ ______
(i) dissents; (ii) extraordinary; (iii) approval; (iv) appraisal; (v) buy-back; (vi) appraised; (vii) judicially; (viii) fair market value; (ix) appraisal; (x) merger; (xi) exchange; (xii) asset; (xiii) articles of incorporation; (xiv) reverse stock split
102
A (i) __________ _______ may affect the corporation's governance, management, and affairs in ways (ii) ________ with the usual rules allocating power between the (iii) _______ and _________, such as by eliminating the board of directors
(i) shareholders agreement; (ii) inconsistent; (iii) directors and shareholders
103
Rule (i) ____ of the (ii) ______ and ______ _______'s rules and regulations prohibit fraud in any transaction to buy or sell securities.
(i) 10b-5; (ii) Securities and Exchange Commission's
104
Under the classical theory of (i) ______ _______, a person commits (ii) _______ _______ if he: (iii) ____ or _____ securities on the basis of (iv) _____, (v) ________ information acquired in his fiduciary capacity; if he does not reveal that information to the (vi) _____ _____ to the transaction; and he is under a (vii) _____ _____ to the other party to (viii) _______ the ________.
(i) insider trading; (ii) insider trading; (iii) buys or sells; (iv) material; (v) nonpublic; (vi) other party; (vii) fiduciary duty; (viii) disclose the information
105
Under the (i) ________ ________ of (ii) ______ _____, a person commits (iii) _____ _____ by dealing in securities on the basis of (iv) _____, ________ information if the person's use of that (v) ________ violates a fiduciary duty to the (vi) ______ of the information.
(i) misappropriation theory; (ii) insider trading; (iii) insider trading; (iv) material, nonpublic; (v) information; (vi) source
106
Under the (i) _____-_______ theory of (ii) ______ _____, a (iii) _____ may be liable for (iv) ____ _____ along with the (v) ________ if the (vi) _____'s disclosure of information to the (vii) ______ was a breach of the (viii) ______'s fiduciary duties, and the (ix) ________ knew (or had reason to know) of the (x) ______.
(i) tipper-tippee; (ii) insider trading, (iii) tippee; (iv) insider trading; (v) tipper; (vi) tipper's; (vii) tippee; (viii) tipper's; (ix) tippee; (x) breach
107
Under the (i) _______-__-_______ theory of (ii) _____ ______, a person who trades on (iii) ______, ______ information in breach of fiduciary duty may (iv) ______ ________ by (v) _______ _________ his plans to trade on the information and all (vi) ______ _______ ahead of time, to the object of the fiduciary duty.
(i) disclose-or-abstain; (ii) insider trading; (iii) material, nonpublic; (iv) escape liability; (v) fully disclosing; (vi) material information
108
A (i) ____ ______ is a corporation with fewer than a specified number of (ii) ________, stock in which is (iii) _____ _______ _______ and subject to one ore more (iv) ______ ________. (v) ______ corporations are typically small, family-run businesses. (vi) _______ may manage the corporation directly. Generally, (viii) _______ in a close corporation owe the same (ix) _______ _______ that (x) ________ in a (xi) _______ ______ owe one another.
(i) close corporation; (ii) shareholders; (iii) not publicly traded; (iv) transfer restrictions; (v) close; (vi) shareholders; (viii) shareholders; (ix) fiduciary duties; (x) partners; (xi) general partnership
109
(i) _______ changes to the corporation may require (ii) _______ approval. These changes include: (iii) _______ the articles of incorporation; (iv) _______ the bylaws; (v) _____; (vi) ______ sales; (vii) ________; (viii) _____ exchanges; and (ix) ________
(i) fundamental; (ii) shareholder; (iii) amending; (iv) amending; (v) merger; (vi) asset; (vii) consolidations; (viii) share; (ix) recapitalizations
110
A (i) _________ is where holders of (ii) _____ or _______ exchange their existing shares for new securities.
(i) recapitalization; (ii) debt or equity securities
111
(i) _________ does not immediately end a (ii) _______'s existence. The corporation may finish (iii) ________ business it had (iv) ____________ when (v) _______ took effect. It may not undertake any (vi) ________ ___ business unrelated to the winding-up.
(i) dissolution; (ii) corporation's; (iii) whatever; (iv) outstanding; (v) dissolution; (vi) signifiant new
112
Proper corporation (i) _______ activities include: (ii) collecting and disposing of ______; taking steps to (iii) _____ _______'s claims against the corporation; (iv) ______ _______ to shareholders; and concluding any (v) _________
(i) dissolution; (ii) assets; (iii) discharge creditor's; (iv) distribute assets; (v) litigation
113
An (i) _______ is neither a corporation nor a partnership, though it is a separate legal person from its owners. An (ii) _____ may sue and be sued it its own name and do anything (iii) ______ and ________ _______ to carry out its affairs.
(i) LLC; (ii) LLC; (iii) lawfully and reasonably necessary
114
In an LLC, (i) ______ hold equity ownership stakes in the LLC. A (ii) ______ is someone who, in a (iii) ______-_______ LLC direct and controls the LLC's operations in the (iv) _____ _______ of its business. The (v) ______ _______ is a contract among the LLC's (vi) ____ that governs: (vii) _______ among the (viii) ______; the powers and responsibilities of the (ix) ________; the LLC's (s) ______ ______ and conduct; and procedures to (xi) _______ the (xii) _______ _________.
(i) member; (ii) manager; (iii) manager-managed; (iv) ordinary course; (v) management agreement; (vi) members; (vii) relations; (viii) members; (ix) manager; (x) business affairs; (xi) amend; (xii) operating agreement.
115
To form an LLC, the organizers must file a (i) _____ __ ______ with the (ii) _____ __ _____.
(i) certificate of *organization*; (ii) secretary of state
116
In a (i) _____-______ LLC, the (ii) _______ decides all matters relating to the LLC's affair. In a (iii) _____-_______ LLC, each (iv) ______ has equal rights in managing the LLC. An LLC is presumed to be (v) _____-_______ by default, unless the (vi) ______ ______ indicates that it is to be (vii) ______-______.
(i)manager-managed; (ii) manager; (ii) member-manage; (iv) member; (v) member-managed; (vi) operating agreement; (vii) manager-managed
117
In a (i) ______-______ LLC, the manager owes the LLC and its members the same fiduciary duties that apply to officers and directors of a corporation.
manager-managed
118
In a (i) _____-_______ LLC, the (ii) ______s owe one another the same fiduciary duties as the (iii) _______ in the (iv) _____-______ LLC.
(i) member-managed; (ii) members; (iii) manager; (iv) manager-managed
119
Like a corporation, each (i) _____ or (ii) _____ of an LLC is not (iii) _______ for the LLC's obligations solely due o their status as a (iv) _______ or ________. A (v) _____ or _____ may be (vi) _________ liable under the doctrine of (vii) _____ _______.
(i) member; (ii) manager; (ii) liable; (iv) member or manager; (v) member or manager; (vi) personally; (vii) veil piercing
120
(i) ______ have a right to distributions from the LLC, insofar as the LLC elects to make distributions. Subject to the (ii) _____ _______, the (iii) _____ are entitled to receive distributions (iv) ______ to their (v) _______. Distributions are not allowed if they would render the LLC unable to pay its (vi) ___________.
(i) members; (ii) operating agreement; (iii) members; (iv) equal; (v) shares; (vi) debts/creditors
121
The rules for (i) _______ an LLC (winding-up) are similar to the rules governing winding up a corporation
(i) dissolution
122
Corporate shareholders or LLC members can bring one of three types of lawsuits; (i) _______; (ii) ________; and (iii) ______ actions.
(i) direct; (ii) derivative; (iii) class actions.
123
(i) _____ litigation is where a shareholder/member sues to recover for (ii) ______ to (iii) _______ in an (iv) _____ ____.
(i) direct; (ii) injury; (iii) himself; (iv) individual capacity
124
(i) _______ litigation is where a shareholder sues to assert a claim on behalf of the (ii) ________ or the (iii) _____-at-______, usually because the (iv) _______ has (v) _____ __ ______ the claim.
(i) derivative; (ii) corporation; (iii) shareholders-at-large; (iv) corporation; (v) failed to assert
125
A corporation (i) ___ _____ is a suit in which a (ii) ____ authorizes one named plaintiff (or a small group of plaintiffs) to (iii) ____ the interests of a larger group of (iv) ______ ______ persons.
(i) class action; (ii) court; (iii) represent; (iv) similarly situated
126
In order for a corporate class (class action) to be certified, it must be: (i) _____; (ii) share _____ ______ of ____ or ____; claims by the (iii) ________ must be (iv) _______ of the class; and there must be a finding that the (v) _____ will (vi) _____ represent the class's (vii) _____.
(i) numerous; (ii) common questions of law or fact; (iii) representative; (iv) typically; (v) representative; (vi) fairly; (vii) interests
