Business Entities & Negotiable Instruments

Question 2

Commendam partnership requirements

Answer 2

1. Written partnership agreement filed with SOS
2. Name must reflect Commendam partnership status
3. Cannot suggest Commendam partner is general partner
4. Describe contribution and value

Question 3

Illegal dividends

Answer 3

All directors who knowingly or without due care vote in favor of disbursement are joint and severally liable.

Shareholders who receive dividends are subrogated to faulty directors for repayment of dividend received.

Question 4

A Commendam parter will lose status as Commendam partner if the following are done by him

Answer 4

1. Allow name to be used in business dealings
2. Participates in management
3. Conducts business with 3rd party on behalf of partnership or leads the 3rd party to believe they are conducting business obo the partnership

Question 5

Withdrawal from LLC without term

Answer 5

Anytime w/ 30 days notice

Question 6

Withdrawal from Partnership w/out term

Answer 6

Anytime with notice in good faith and at a time not unfavorable to partnership

Question 7

Withdrawal from LLC with a term

Answer 7

1. Consent of majority members, OR

2. Upon failure of another member to perform a material obligation

Question 8

Expulsion of a partner

Answer 8

1. Just cause, or

2. Majority vote of partners

Question 9

Partnership withdrawal with a term

Answer 9

1. Approval of all partners, OR

2. If a partner fails to perform a material obligation

Question 10

Articles of incorporation (corporation)

Answer 10

1. Name of Corp
2. Purpose
3. Number of shares
4. Par/no par value
5. If more than one type of stock
6. Duration (unless perpetual)
7. Name & address of incorporators

Question 11

Initial report (corp)

Answer 11

1. Signed by each incorporator
2. Location and address of corp office
3. Name and address of registered agents
4. Name and address of initial directors (if any)

Question 12

Cumulative voting

Answer 12

• Must be provided for in articles

- shares of stock count as separate votes and may be cumulated to vote in favor of one or more directors

Question 13

Is a director a Mandatary of a corporation?

Answer 13

No! Acts must be approved by vote of the board of directors

Question 14

Is a partner a Mandatary of a partnership?

Answer 14

Yes, with respect to all matters in the course of ordinary business.

**Does not extend to lease, alienation or encumbrance of an immovable

Question 15

Articles of Organization (LLC)

Answer 15

File w/ initial report

1. Name of LLC
2. Purpose

Question 16

Initial report for LLC

Answer 16

1. Name and address of LLC
2. Name and address of registered agent
3. Names and addresses of members (or managers if manager managed)

Question 17

Preemptive Rights

Answer 17

*Must be provided for in articles of incorporation if they are to exist- provides a right to existing shareholders that allows them to purchase an equal % of newly issued shares

Question 18

Initial report (corporation)

Answer 18

1. Location and address of corporation’s registered office
2. Name and address of registered agents
3. Name and addresses of directors (if elected)

Question 19

Duties of directors and officers of a corporation

Answer 19

Fiduciary duties of:
1. Due care (discharge duties with dilligence and skill of a person in like circumstances), and

2. Loyalty (act in best interest of corporation)

Duty of care is subject to the business judgment rule, and can be waived in the articles.

Duty of loyalty cannot be waived

Question 20

Conflict of interest transaction

Answer 20

Ok if:

1. Disinterested majority of board ratifies
2. Majority of SH ratify
3. It is fair to corporation

Question 21

Percentage of Shareholder vote to sell majority of corporate assets

Answer 21

2/3 of SH

Question 22

Manager managed LLC

Answer 22

Members elect board of managers