Charitable giving & other missed concepts

Question 1

What is the Delaware law in regards to charitable giving?

Theodora Holding Corp. v. Henderson

Answer 1

DE allows companies to make donations for public welfare for charitable, scientific, or educational purposes. These gifts must be reasonable as to amount & purpose of the gift.

Question 2

What is a reasonable amount for a charitable gift?

Answer 2

Around 10%, the IRS deductable amount, of the companies income.

Question 3

If an interested transaction is approved by a majority of disinterested directors/shareholders how will the transaction be evaluated?

Answer 3

Through the BJR

Question 4

When is an interested transaction not automatically void/voidable?

Answer 4

Either:
1. Informed disinterested board approval
2. informed disinterested shareholder apporoval
3. The transaction was fair to the corporation

Question 5

What is the default LLC management type under the RULLCA?

Answer 5

all LLCs are member-managed, unless the operating agreement states otherwise.

Question 6

In what situation could a company not make a distribution?

Answer 6

Along with a distribution in bad faith or fraud, if a company can’t pay its debts as they come due because of the distribution.

Question 7

What is a fiduciary duty?

Answer 7

A relationship that requires one party to put the other’s interests ahead of their own

Question 8

What is a stock option?

Answer 8

An optionee has the right to buy a specific # if shares of common stock at a predetermined price.

Question 9

Which of these positionss can a corporation not fill?

• Member of an LLC
• Shareholder
• Director

Answer 9

A corporation cannot serve as a member of the board, board members must be natural persons.