Business Structures Flashcards
If a corporation already owns 90% or more of a subsidiary’s stocks, merger of the two companies is (1) considered a MATERIAL EVENT or NOT? (2) Approval is required from stockholders/BOD of PARENT or SUBSIDIARY?
- Not material.
2. No stockholder/BOD approval needed.
This partner has a fiduciary duty to the limited partnership and the other partners: GENERAL or LIMITED?
General Partners
This business structure provides (1) all owners with limited liability, and (2) avoids federal taxation of income at the entity level.
Subchapter S Corporation
This type of partner is permitted to have other forms of relationship with the partnership, including being a creditor (secured or unsecured): GENERAL or LIMITED PARTNER?
Either or both general and limited partners
A partner can both be general and limited: TRUE or FALSE?
TRUE. Partner can be sharing profits and losses out of partnership capital on both interests, but only sharing on losses exceeding partnership capital with respect to his or her general interest.
When a sale of a partnership interest occurs outside of the partnership, the new partner is required to make a contribution to the partnership. TRUE or FALSE?
FALSE.
This act is one committed by management or BOD that exceeds their authority and may cause them to be liable without extending general liability to the shareholders.
Ultra vires act
When is unanimous consent of the partners required? AGAS
AGAS
- Admission of a new partner
- Guaranteeing third party debts (suretyship)
- Admitting or submitting a legal claim
- Sale or pledge of partnership property
This is a device by which one or more shareholders agree to issue all or part of their stock to a trustee who then holds legal title to the stock and has all the voting rights possessed by the stock.
A voting trust
This is a shareholder agreement among shareholders to vote their shares in a specific manner
Advance agreement
A partnership agreement must be in writing if: contribution is $500 or more OR partnership purpose cannot be completed within one year of formation?
Partnership purpose cannot be completed within one year of formation
Partners who own majority of the partnership may choose to continue the partnership within how many days of a partner’s withdrawal, death, or bankruptcy?
90 days
Up to how many remaining partners will a partnership be considered dissolved?
One partner
A plan of merger must be approved by how many shareholders of both corporations? Majority or unanimous?
Majority
Under SEA of 1934, a reporting corporation must file its proxy statement if it has how many classes of stock: ONE CLASS or MORE THAN ONE CLASS
ALL reporting companies must file proxy statements in connection with upcoming shareholder meetings.
