corp

Question 1

shareholder meetings

Answer 1

10-60 days notice stating time/place/purpose

Question 2

what is the duty of care

Answer 2

presumption that a d acted on an informed basis, in good faith, and in the honest belief that an action was in the best interest of the company

P claiming breach has the burden of proof

Question 3

duty of loyalty

Answer 3

in good faith with a reasonable belief he is acting in corps best interest. 3 ways to challenge:

1. Director is on both sides - D has material financial interest in a K
2. Competes with corp
3. Corporate opportubity - may not usurp corp opportunities

Question 4

Defenses to breach of duty of loyalty

Answer 4

1. approval by disinterested SHs
2. approval from disinterested SHs
3. K deemed to be fair at time entered into

Question 5

Record date

Answer 5

determines whos entitled to vote by determining day

Question 6

Direct suits vs derivative suits

Answer 6

Direct - when wrong amounts to breach of duty owed to the individual personally - IE denial of rights, denial of payment of divident

Derivative - when injury is caused to corp and SH attempts to assert those rights

Question 7

Process to file a derivative suit

Answer 7

SH must have:

1. standing 2. adequacy - IE SH represents interest of the corp, 3. demand - 90 days post demand unless irreparable injury

Question 8

Lawsuits against SHs

Answer 8

Piercing the corporate veil

Allowed for close corporations and LLCs, must show that SHs abused the privileges of incorporating and fairness

Show undercap, failure to follow corporate formalities, commingling of assets,

Question 9

Basic info needed to form a corp

Answer 9

Number of shares, incorporators, articles of incorp

Question 10

Two ways in which corporations are treated as if in existance while not

Answer 10

de facto corp or corpo by estoppel.

de factor corp: owner must make a good faith effort to comply with filing reqs and operate business as if formed correctly

corp by estoppel- a person who deals with a corp cannot prevent liability by disclaiming its existence

Question 11

SH rights

Answer 11

to inspect and copy records w/ 5 day notice and proper purpose

to amend corp bylaws under state law

Question 12

Special meeting

Answer 12

must have two days notice if special meeting, presence constitutes waiver unless raised at beginning

Question 13

Issuance of stocks

Answer 13

Issuance must be approved by BoD & value approved

Question 14

two types of LLCs

Answer 14

member managed - direct management via LLC members who are agents

manager managed - centralized management by managers who aren’t members

Question 15

Unity of interest and ownership test to pierce the corporate veil

Answer 15

P demonstrates that there was such unity between ownership and corp that corp did not have an existence independent of the members

Question 16

self interested transactions

Answer 16

requires: financial significance of the tnx that would influence the director’s vote, interest can be direct or indirect but it must be financial and material

Question 17

fairness of a transaction

Answer 17

considers substance and procedure of transaction

substance - corp received something of comparable value

procedure - whether directors used appropriate processes

Question 18

burden in challenging duty of loyalty

Answer 18

interested director has burden of proving sub and pro fairness

Question 19

recourse post conflict of interest transaction

Answer 19

may be enjoined or rescinded, and corp may seek damages from directors

Question 20

Duty of care

Answer 20

must act like a person in a similar position would reasonably conduct themselves

Question 21

BoD can amend bylaws unless

Answer 21

articles of incorp or vote by shareholders limit this power

Question 22

Limits of SH bylaw

Answer 22

if dealing with director nominations - cannot limit the board’s power to amend, add, or repeal

Question 23

Limits of board action post SH amendment

Answer 23

If SHs pass approve a bylaw amendment that limits further board changes, board can only amend or add to the bylaw to safeguard the voting process