Business Entity: Rights & Duties Flashcards
1
Q
Business Entity:
Rights & Duties
General Partnerships
A
General Partnerships
- partners are entitled to equal management rights and their share of capital contribution
- partnership property belongs to partnership
- partners are entitled to use or possess only on behalf of partnership
- creditors may not seize assets of partnership to cover partners personal debts
- general partners are not entitled to compensation for work performed
- partners may veto new partner admission
- partners have information rights
- standards of conduct: duty of loyalty & care
2
Q
Business Entity:
Rights & Duties
Corporations
Shareholders
A
Corporations Shareholders - right to vote - right to inspect corporate records - right to have financial priority respected - right to exercise appraisal rights - right to file derivative lawsuits - right to exercise preemptive lawsuits
3
Q
Business Entity:
Rights & Duties
Corporations
Directors
A
Directors Duties Duty of Attention - attend board meetings, gain basic familiarity with business, study financial statements Duty of Care - in good faith, with care of ordinarily prudent person, in manner reasonably believed to be in best interest of corporation Duty of Loyalty - fiduciary duty - avoid conflict of interests, transactions should be scrutinized, respect corporate opportunity doctrine Rights - right to rely on officers - Business Judgement Rule - shareholders can eliminate their personal liability Officers - run day-to-day operations - same duties as directors
4
Q
Business Entity:
Rights & Duties
LLC’s
A
LLC’s
Duty of Care
Duty of Loyalty
