Business Organizations Flashcards
Preamble
Corporations, TX has adopted the TBOC and it governs.
How to form a Professional Association
- filling a CoF
- w/ TX SoS
- in accordance w/ TBOC
- can be formed by individuals, licenses as doctors, medicine, osteopathy, podiatry, dentistry, optometry, therapeutic, chiropractic, medicine, mental health professionals, and lawyers
How can C Convert to Another Biz Type
- board action
2. 2/3 SH approval
Fundamental Corporate Change Req
- majority of board
2. 2/3 of shares entitled to vote
What Governs Professional Cs
Title 7 of the Business Organization Organization Code (BOC)
How can the Article of the C be Changed
- board action
2. 2/3 approval
When Dissenting Shareholder has Right of Appraisal
- fundamental C change
- merger
- sale of shares in exchange
- transfer of substantially all assets
What is Duty of Care for a Director
- good faith
- exercise ordinary care/prudence
- prudent person similar circs
What is SH’s Right to Inspect the Books
- own stock for min of 6 months or own 5% stock
- make written demand
- state proper purpose
How SH’s take a Valid C Act
- unanimous written consent or
- majority vote at meeting
- special meeting
Req for SH to Bring Derivative Suit
- owned stock when claim arose
- written demand when claim arose
- wait 90 days
How Director can Benefit from Interested Transaction
- full disclosure to board
- approval
- at meeting
- or majority of disinterested D’s and SH’s
- must let board reject first
Reqs for Director’s Meeting
- proper notice
- quorum
- majority of Ds approve
Biz Judgment Rule
- good faith
- informed
- rational basis
Ways Corp can be Dissolved
- written consent of all SHs
- board action + 2/3 Sh approval
- ct ordered involuntary
Duty of Loyalty
- Ds
- good faith
- reasonable belief actions are in best interest of C
Req for Director/Officer Meetings
- quorum
- majority vote of those present
- if D leaves, this breaks quorum
- special meeting notice
- time & place (no purpose, no email, no proxies)
Req for BoD
- at least one or more natural personas as directors
- Ds elected by SH at annual meeting
- bylaws can provide 4 classified board
- which divides B by halves or thirds
- w/ 1/2 or 1/3 elected each yr
When do Preemptive Rights Arise
- only has these rights if articles include them
2. prior to 9/03 SH had the rights unless articles disclaimed them
Req for Valid Corp Act
- unanimous
- written consent of Ds (no meeting)
- majority vote (with meeting) + quorum
Formation Req of a Corp
- people
- paper
- act
Info Req in the CoF
- Corp name
- name & addy of incorporator & initial board
- duration
- purpose
- capital stock structure
- SH rights
- statement that C will not commence prior to receipt of min of $1K
- if Close Corp, provision
- name & addy of corp agent & incorporates
Req for Corp Formation
- certificate of information
2. filed w/ the TX SoS
When Veil of Corp can be Pierced
- alter ego theory
- undercapitalization
- avoid existing obligations/fraud
What are Preemptive Right
- rights of current SH to maintain their proportionate stake in the C
- by allowing them preemptive rights to buy stock to maintain their share
- any time issuance of stock by the C for $
Req for Limited Liability (LLC)
- any natural person
- file w/ SoS
- pay fee
- include the words “lit liab co” or “LLC”
- includes PLLC
Statutory Req for Directors
- one or more
- elected at annual meeting
- removed before term expires by SH
- board of SH can fill
Main Characteristics of a LLC (NOT a CORP)
- like a corp
- managers run C unless otherwise stated in the articles of organization
- pass through tax like P?
- limited liability for all obligations, except own torts
- LLC liable on own Ks and torts
What is General Partnership (GP)
- biz entity where partners
- w/ express or implied intent
- share w/ each other profits or losses
- of biz undertaking in which all invested
Biz Org Partnership Preamble
principle/agency relationships exists when principal has assented, benefited, and has control
What is Actual Authority
- agent reasonably believes
2. principal has given A authority through the following
Req to Bind Principal to a K entered into by an Agent
- actual authority or
2. substitute
What is Apparent Authority
- principal clocked agent w/ appearance of authority
2. 3P reasonably relied on appearance of authority
Substitutes fr Actual Authority to Exist to Bind a Principal to an Agents K
- ratification
- adoption
- apparent authority
Types of Authority
- actual authority
- apparent authority
- implied authority
Agents Duties to Principal
- duties under K
- fiduciary duty of loyalty
- obedience to reasonable directions
- reasonable care under the circs
How Agency Relationship Created
- agreement
- of P
- principal has capacity
Principal Duties to Agent
- compensate
- reimburse
- indemnify
How to Determine Whether Tortfeasors was EE or independent Ker or
- right to control
- supply tools/workplace
- long term employment
- little skill
- part of reg biz of ER
- payment regularly and not interval
How Actual Authority Terminate
- reasonable/specified time
- change of circs
- agent acquired adverse interest
- Agent says so
- P says so
- death
- incapacity
- bankruptcy
What is Actual Express Authority
principal used words to express authority to agent
When does a Partnership Exists
- association of 2 or more ppl
- to carry on business
- for profit
- as owners
How an Limited Liability Part (LLP) is Formed
- file certified formation w/ SoS
- pay fee
- written LP agreement
- name has “LP” or “Ltd” in it
Order of Distribution of Partnership Assets Upon Winding Up
- creditors
2. partners for capital account
When Principal is Liable for Independent Contractor’s Torts
- inherently dangerous activity
- non-delegable duty
- principal negligence in hiring
Duties a Partner Owes to Partnership
- strict fiduciary duties
- duty of care
- duty of loyalty
- duty to exercise good faith
- duty to render full informal about partner upon reasonable request
Main Characteristics of Limited Partnership (LP)
- one or more GPs
- one or more LPs
- GP like normal P
- LP limited to capital contribution, unless LP takes pat in control
Factors TBOC List to Determine whether a Partnership Exists b/w Parties
- receipt of right to receive profits
- intent to be partners
- participation or rights to participate in control of B
- sharing or agreeing to share losses
- contributing $ or other property to B
How LLP is Formed
- register annually w/ SoS
- pay $200 partner fee
- include “registered limited liability partnership” or “LLP”
- carry min $100K liability insurance or segregate
Main Characteristics of LLP
- its like a GP
2. but not vicariously liable
Reqs of Limited Partnership (LP)
- file a certificate of LP
- at least 1 GP
- at least 1 LP
Events Req to Wind Up Partnership
- illegal
- judicial decree
- sale of substantially all assets
- end of definite term
- unanimous consent
- partnership at will, agreement by majority in interest
