Business Structures Flashcards
What are characteristics of general partnerships?
Limited duration Unlimited liability Informal Flow through entity Partners jointly and severally liable on contracts and torts
What are three basis rights in partnership?
Profits - can be transferred
Property
Participation
What are types of authority?
Actual - express or implied
Apparent - partnership gives impression
Unauthorized action - not liable unless ratify
When is unanimous consent in partnership required?
AGAST Admit new partner Guarantee debt of 3rd party Admit or submit legal claim Sale of partnership property Third parties aware of limit to partner's actual authority
What is the order for partner distributions?
Amounts owed to partners for loans
Partner’s capital account
Profits
What are characteristics of limited partnership?
Must have one general and one limited
Formal
GP has fiduciary duty, LP does not
Both GP and LP can be secured or unsecured creditor
What are characteristics of LLC?
Formal
1 or more people
Limited liability for contracts/debts, unlimited for malpractice
Taxed as P/S
What are characteristics of LLP?
Formal
2 or more people
Limited liability for malpractice, limited for contracts/debts
Taxed as P/S
What is included in Articles of Incorporation?
Name Nature and purpose Term Name and address of each incorporator Capitalization Initial board Registered agent By laws
What are duties of Board of Directors?
Select officers of company Reacquire T/S Declare dividends In charge of general operations Not agents - officers are agents
What is an ultra vires act?
If Board takes an action that exceeds the powers granted to it under the Articles of Incorporation
What is the doctrine of respondeat superior?
Employer is responsible for the torts committed by employee in normal scope of duties
What are shareholder rights?
1) Right to vote on the following:
Board of Directors
Liquidating dividends
Dissolve corporation
Mergers/consolidations - if change in ownership significant
Amend Articles of Incorporation
Loans to directors
2) Appraisal Right - get stock appraised if disagree with merger
3) Preemptive Right - prevent dilution with newly authorized stock only
4) Right to bring derivative lawsuit
When do the courts pierce the corporate veil?
S/H can be held personally liable if these occur: Undercapitalized corporation Shareholder fraud Direct action - S/H running business Commingling assets
What is a voting trust?
Stock can be issued to a trustee who hold legal title to stock and has all voting rights
Must be written and limited to 10 years
