Corporations

Question 1

De facto Corporation

Answer 1

1. Statute under which entity could have been validly incorporated
2. Colorable compliance with the statute and good faith attempt to comply
3. Conduct of business in corporate name and exercise of corporate privileges

Question 2

Corporation by estoppel

Answer 2

People who have dealt with the corp as if it were a corp estopped from denying corporations existence

Question 3

Piercing corporate veil

Answer 3

1. Ignoring corporate formalities( alter ego/ mere instrumentality)and injustice has occurred
2. Inadequate capitalization at time of formation
3. Necessary to prevent fraud

Question 4

Capital structure

Answer 4

1. Debt securities- borrowed funds promises to repay
2. Equity securities- shares
   Give ownership interest

Question 5

Share types

Answer 5

1. Authorized shares
2. Issued and outstanding shares
3. Authorized but unissued

Classification

1. Common shares
2. Different classes of shares

Question 6

Promoters

Answer 6

Duties

1. Fair disclosure and good faith

Question 7

Pre incorporation agreements

Answer 7

1. Promoter jointly and severally liable for ore incorporation obligations
2. Personally liable on contracts
3. Released only by novation
4. Right to reimbursement if corp benefits
5. Corp only bound by adoption

Question 8

Shareholder control over management

Answer 8

1. Directors manage

2. Shareholders have power to elect board

Question 9

Meetings

Answer 9

1. Annual shareholder meeting at end of fiscal year or within 15 mos of last meeting
2. Special meetings-
   A. Called by directors or people with 1/10 shares
3. Must have notice of meetings between 10-60days

Notice must have tine, place, date of meeting and purpose for special meetings

Question 10

Shareholders of record can vote

Answer 10

1. As of record date

2. Default record date is date of notice sent out

Question 11

Proxies

Answer 11

1. 11 months unless otherwise

2. Revocable unless consideration

Question 12

Quorum

Answer 12

Majority of outstanding shares

Cant be broken

Question 13

Cumulative voting

Answer 13

Each shareholder gets as many votes per share as are directors being elected

Question 14

Shareholder suits

Answer 14

1. Direct
A. Who suffered immediate direct damage
B. To whom did defendants duty run?
C. Recovery is for shareholder
2. Derivative
A. Asserting corps rights
B. Recovery to corp
C. Standing- ownership at time of wrong
D. Dismissed if not in corps best interest

Question 15

Duty if care/ business judgment rule

Answer 15

1. Good faith
2. With care of ordinarily prudent person in like position
3. In manner reasonably believe to be in best interest

Burden on challenger

Question 16

Duty of loyalty

Answer 16

No conflicting transactions

1. Party to transaction
2. Has a beneficial financial interest
3. Is a director/ agent of another business

Question 17

Ok interested transaction

Answer 17

1. Approved by majority of directors without interest and all material facts disclosed
2. Approved by majority of shareholders without conflicting interest
3. Judged fair to corp

Question 18

Dissolution

Answer 18

1. By incorporators or initial directors -> articles of dissolution to state
2. Dissolution by corporate act
3. Effect
   Winding up
   May revoke dissolution
4. Administrative dissolution
5. Judicial dissolution

Question 19

Improper meeting notice

Answer 19

Can nullify meeting action

Question 20

Director meetingd

Answer 20

1. In person or by tech( no proxies)
2. No notice needed for regular meetings
3. Special meetings require two days notice
4. Quorum of directors must be present when vote happens
5. Majority of director affirmative vote required

Question 21

Business judgment rule

Answer 21

1. Good faith
2. Ordinary care
3. Believed to be best interest of corp

Question 22

Officers

Answer 22

1. appointed/ removed by board of directors

2. Has authority given by by laws or board

Question 23

Fundamental corp changes

Answer 23

1. Board resolution
2. Notice to shareholders
3. Shareholder approval
4. Articles of change filed with state

Question 24

Dissenters appraisal remedy

Answer 24

1. Notice of demand for appraisal
2. Vote against change
3. Demand payment after change approved

Purchase shares at fair price