Business Structures - 15 Flashcards
What are shareholder rights
- they can vote on dissolution
- elect B o D
- receive dividend when declared
consolidations, mergers and dissolutions are al fundamental change s that require what
shareholder approval
Can you purchase anoretic corporation stock without shareholder approval
Yes you can
What must a limited liability partnership have
They must have at leave 1 general partner - must have a driver
The general partner has UNLIMITED liability
Does a limited partner have unlimited liability
They are passive investors so their liability is limited generally to the amount they have invested
Can a partner be a creditor
Yes they can be a creditor eater secured or unsecured
Can a general partner also be a limited partner
Yes they can - this means that they can share in the profits and losses
What are the main points of a general partnership
- two or more persons working as co-owners
- parters are personally liable for business debts
- profits flow through to individual partners
- nothing formal is required to set up
- there is unlimited personal general liability of rte partner s
What is the most popular form of business in US
Sole proprietorship
- no formal set up
- may need licenses
- Disadvantage - the individual has unlimited personal liability
- no formal process for termination
What is UPA and RUPA
UPA _ provisions for partnerships
RUPA - revised version - procedures for forming, operation, and termination of partnerships
It is the authority when there is no specifics in the partnership agreement
Can B o D issue corporate debt securities
NO - this is the job of the officers, not directors
What can the B of D do
- Declare dividends
- Issue Stock
- Repurchase stock
- Select the Officers
What is a voting trust
This is a device where shareholder agree to give their stock to a trustee who has the legal title and therefore all of the voting rights
What is a proxy
This is when a shareholder authorizes an age to vote their shares at a meeting
What is cumulative voting
this is when all available votes are used for one B of D candidate
What is a shareholder advance agreement
This is an agreement among shareholders to vote their share in a specific manner
What are LLP people called
general partners
What are LLC members called
members
What requires unanimous consent in partnership
- admission of a partner
- guaranteeing third party debts ( surety ship)
- admitting or submitting a legal claim
- sale of partnership property
What does not require unanimous consent
- dissolution of the partnership
What is one of the key advantages to a LLC
You can participate in management, and have limited liability
- you liability is limited to your investment in the business
- you are NOT limited for your own negligence and malpractice
What are the liabilities of an LLP
- In a LLP - you are protected from eh malpractice and negligence of others, but you are still obligated of the contractual debts of the business
Can a corp indemnify its officers for liability incurred in a suit by stockholders
Yes - under RMBCA you can
Do officers have to own stock of a company
no - they don’t
Does general partnership have to file a certificate
Yes they do
If one company absorbs another - what must be done
The stockholder of both companies must be given due notice of a special meeting and a summary of the merger plans
Do NOT need unanimous votes
What can’t a Director or officer do
- earn commission on sale s of corp property
- purchase controlling interest in a competitor co
- take personal advantage in a n opportunity offered to the company
mergers and consolidations normally require what
The support of the majority of both boards
an exception is when there is a merger of a subsidiary that tis already 90% owned by the parent
what are ultra vires acts
These are acts that are beyond the authority of the corporation
When you do this the directors who approved the decision are liable, but this would not extend to shareholders
What do you get if you are a participating preferred shareholder
When preferred shares are participating, as is the case, preferred shareholders receive a proportionate amount of excess dividends when a higher than normal rate is paid to common shareholders.
What does a promoter do
they enter into contract on behalf of corporations that have not yet been formed
- the promoter is personally liable
- the corporation is not bound until the B of D adopts it
- the promoter is relieved of the there liability hone released through a novation ( which is one contract is substituted for another) when the corporation replaces the promote as the obligor ion the contract
If you are a partner and want to assign you interest how does this work
You can assign profits and losses without the consent of the other partners.
However - the new guy does not have the same rights to participate in management
what is a secured creditor
A secured creditor is any creditor or lender associated with investment in or issuance of a credit product backed by collateral. Secured creditors have a first order claim on the payouts of a distressed credit investment.
Usually a bank
If you are a sub and you are being merged to the parent - what are the dissenters given
This is when you own 90% of the other corp.
Does NOT need shareholder approval
Or approval by the board of the suck
The minority shareholders must be offered a right of appraisal if they dissent to the merger
What are a shareholders rights
They have the right to vote on fundamental changes in the corp structure
dissolution is one of them
consolidations
mergers
-Not the purchase of anoretic corps stock
What are cumulative preferred stock holder considered
They are considered to be unsecured creditors
Does a general partner have fiduciary duty to the limited partnership
yes and to the other partners
a limited parter does NOT have a fiduciary duty
what are warrants considered
equity security
What are convertible bonds and debenture bonds considered
debt security
Under RMBC - when must a corp get a certificate of authority to do business in a state
A certificate of existence for a domestic corporation, one incorporated in the state, or a certificate of authorization for a foreign corporation, one incorporated in another state, is to be obtained from the secretary of state to provide conclusive evidence that the domestic or foreign corporation is in existence or is authorized to transact business in the state.
when you have an office in another state qualifies
Does a partnership need to have written agreement to be formed
no can be oral, written or implied
How are partnership percentages allocated
unless specifically discussed - it is usually split - including debts
What happens when a partner withdrawals from a partnership
- they can - it doe NOT automatically cause dissolution
the remaining partners can decide in 90 days if they want to continue
If withdrawal bring the partner number to 1 then YES dissolve
when can a stockholder of a closely held corp be challenged successfully - pierce the corp veil
If the stock of a closely-held corporation is issued for less than par value it is considered undercapitalized, and the shareholders acquiring stock below par may be liable for the difference under the watered stock rule.
How is a SMLLC treated for tax purposes
as a sole proprietorship
Does an LLC require an operating agreement
no
What is the order of payment when a dissolution of a partnership occurs
1 - pay creditors
2 - partners to cover loans to partnership
3 - in proportion to partner capital accounts
4 - profits
when must a partnership be in writing
when the partnership purpose can not be completed in 1 year of formation
What is included in article of incorporation
a registered agent
name of incorporates
number of authorized shares
