Corporation Essay

Question 1

Amendment of the Articles

Answer 1

The articles may be amended by a majority of the Directors at a meeting or otherwise if the directors unanimously consent.
* As to a fundamental change, SH Consent is required.

Question 2

Shareholder Meeting

Answer 2

Record date within 60 days (10-60 days)

• statute will control unless articles say otherwise.
• needs to be in Articles, not by laws

Notice:

• The director must send notice to al SH entitled to vote.
• Notice must indicate the transaction be continued.
• Failure for notice will make meeting void.
• Waiver can be given by SH showing up.

Question 3

Shareholder Voting

Answer 3

A Shareholder may vote his/her shares in person or by proxy.

Proxy

• is a signed writing authorizing another to vote the shares.
• proxies are valid for 6 months in Nevada, unless provided otherwise.
• proxies are revocable, even if they state irrevocable, unless coupled with interest.

Quorum
* There must be a quorum represented at the meeting.
= in Nevada, a quorum is a majority of the outstanding shares, unless higher portion is requested by the Bylaw or Articles.

• So long as quorum requirement are satisfied, most corporate actions taken by Shareholders only a majority of shares entitled to vote must approve the amendment not just majority of shares actually voting.

Question 4

Corporation

Duty of Care

Answer 4

A director must act in good faith and in the best interst of the Corp.
* the duty of care requires a director act as a PRUDENT person with regards to her own business (objective)

Business Judgement Rule:

• Where a directors actions case a loss or is otherwise harmful for the Corp. the BJR will shield them from liability as long as the decision was:
  1) Informed
  2) Good faith
  3) Rational Basis

Question 5

Corporation

Duty of Loyalty
Corporate Opportunity

Answer 5

A Director owes a duty of loyalty to the corporation, refraining to put her personal interest above the corporation.

Corporate Opportunity
* a Director breaches a duty of loyalty by competing directly with the corporation by taking a corporate opportunity.
= A Director cannot USURP a corporate opportunity without first notifying the board and wait for the board to reject the opportunity.

Shareholder Derivative Suit:
* A shareholder can bring a cause of action on behalf of the corporation.
= The shareholder must own stock at the time of the wrong and Adequately represent the interest of the Shareholders and corporation.
= A written demand must be made of the corporation unless futile.

Question 6

Corporation

Sale of Assets

Answer 6

1) Marjority of directors and shareholders must approve sale if not within the regular course of business.

2) Appraisal Rights:
- Defacto Merger

Question 7

Corporation

Amendment to Articles

Answer 7

Majority of directors and shareholders must approve

No Quorum Concept

Question 8

Dissolution and Liqudiation

Answer 8

Majority of directors and shareholders must approve.
(No Quorum Concept)

• If liquidation, pay outside creditors first.

Question 9

Articles in Corporation

Capital Stock

Answer 9

The articles of incorporation must describe the capital structure
* Specifically they must contain the authorized stock, the number of shares per class, and information on voting rights and preferences per class.

• Alternatively, the articles may change the board of directors with making decisions.

Issuance of stock.