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BA > Corporations > Flashcards

Corporations Flashcards

1
Q

T/F

Shareholders of a corporation are liable for the debts of the corporation

A

False

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2
Q

Corporations must file their ____ with the Secretary of State

A

Articles of Incorporation

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3
Q

What 5 pieces of information must be included when a corp. files their AOI?

A
  1. Name of Corporation
  2. Name of Initial Registered Agent
  3. Name and Address of Each Incorporater
  4. Street and Mailing Address of Corp.
  5. Number of Shares Authorized to Issue
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4
Q

T/F

Bylaws prevail over Articles of Incorporation

A

False

Articles prevail

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5
Q

A ___ ___ corporation is formed when the S.O.S ACCEPTS a corporation’s A.O.I

A

de jure

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6
Q

What happens when proprietors of a corp. come close to forming a de jure corporation?

A

A de facto corporation is formed

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7
Q

T/F
A corporation is liable for its own debts when a de jure corporation is formed, but not when a de facto corporation is formed.

A

False

At either point, a corporation is liable for its own debts

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8
Q

What may, but not must, be included when a corp. files their AOI?

A
  1. Purpose of Corp.
  2. Defining, limiting and regulating powers of the corp.
  3. Liability of Shareholders
  4. Limitation of duration
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9
Q

Provisions limiting or eliminating the personal liability of directors will not have effect in cases of:
(4)

A
  1. acts or omissions that the director knew conflicted w/ best interest of the corp.
  2. unlawful distributions
  3. transaction where the director derived a personal benefit
  4. act or omission prior to the date the provision became effective
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10
Q

Name the 4 abbreviations a corp. can include in their name?

A

Corporation (Corp.)
Company (Co.)
Incorporated (Inc.)
Limited (Ltd.)

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11
Q

T/F:

A corp. is required to have one or more shareholder

A

False

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12
Q

When filing a corp.’s AOI, the documents can include a delayed effective date, but it may not be later than the ____ day after the date it is filed

(this is a number)

A

90th Day

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13
Q

What time are the Articles of Incorporation effective if there is a delayed effective date but no time specified?

A

11:59:59 pm on the delayed effective date

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14
Q

T/F

Bylaws are publically held information, accessible by anyone

A

False

Bylaws are strictly an internal document

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15
Q

T/F

Bylaws can be different from the AOI, but AOI prevail

A

False

Bylaws CANNOT be inconsistent with AOI and Articles ALWAYS prevail

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16
Q

What happens if a corp. does not adopt bylaws?

A

The corp may not be invalidated but it may leave them vulnerable to piercing the veil

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17
Q

Should a corporation list all their powers in the AOI? Why or why not?

A

No

This may limit the powers to those listed instead of the broader reach that the statute (MBCA 3.02) allows

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18
Q

Under a ___ ___ corporation, good faith is required and the person bringing the action must be ____ that the incorporation was defective

A

de facto

unaware

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19
Q

Under ____ ____ ___, if someone reasnoably belives that a corporation has effectively incorporated and treats it as such, they cannot be estopped from denying it

A

Corporation by estoppel

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20
Q

Which document governs the amount of shares a corporation can issue?

A

AOI

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21
Q

Issued shares are considered ___ until they are reacquired, redeemed, converted or canceled

A

outstanding

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22
Q

If there are outstanding shares, there must be one or more shares that together have ____ voting rights

A

unlimited

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23
Q

___ shares are the shares a corp. has not issued

A

Authorized

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24
Q

___ shares are the shares a corp. has issued

A

Issued

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25
Q

___ shares are shares held by the corp. itself but unowned.

A

Treasury

A corporation cannot vote these shares

26
Q

Each share of common stock is worth ___ share

A

One

27
Q

___ stock is designed to appeal to high value investors

A

Preferred

28
Q

Why is preferred stock more appealing to high value investors?

A

Because this type of stock has preference in payments of dividend or rights to corporate

29
Q

__ ___ is the lowest value for issuing stock

A

Par value

30
Q

T/F

A corporation has the authority to issue shares for less than par value

A

False

31
Q

T/F

A shareholder is personally liable for the acts or debts of the corp.

A

False,

A shareholder can only become liable for his own act or conduct or through piercing the corporate veil

32
Q

If a shareholder acts ___the scope of authority, they can be personally liable for the acts or debts of a corp.

A

Outside

33
Q

T/F

The laws in the state where the corporation was incorporated governs the internal affairs

A

True

34
Q

A shareholder is considered to have “pierced the corporate veil” when they fail to respect the ___ or ___ of the corp.

A

Rules

Formalities

35
Q

T/F

To be held liable under piercing the corporate veil, it must be proven that the shareholder was acting fraudulently

A

False

Evidence of fraud is not necessary

36
Q

T/F

Directors have the power to act individually

A

False,

Directors only act as a group

37
Q

Directors (are/are not) agents of the corporation

A

Are NOT

MCBA 3.01

38
Q

Through the use of (directors/officers), shareholders can exert their influence and control over the management

A

Directors

39
Q

Through the use of ___, the board can make management decisions

A

Officers

40
Q

Officers (are/are not) agents of the corporation

A

ARE,
Officers can bind the corp. to acts done on its behalf
(MCBA 8.41)

41
Q

Inside directors (are/are not) officers of the corporation

A

ARE

Inside directors can bind the corp. to acts done on its behalf

42
Q

Outside directors (are/are not) officers of the corporation

A

ARE NOT

43
Q

A ___ is the minimum number of members of a corp. that must be present at any of its meetings for the directors to act

A

Quorum

44
Q

Unless the articles provide otherwise, a quorum consists of a _____ of the directors

A

Majority

45
Q

T/F:

Notice is required for ALL meetings, regular or special

A

False,

Notice is only required for all special meetings

46
Q

The ____ determines who gets to vote at an upcoming shareholder meeting

A

Record Date

47
Q

A proxy votes on the behalf of someone else as an ____

A

Agent

48
Q

In the absence of __, __, or ___, courts (will/will not) disturb good faith business judgments of corporations w/o evidence of a breach of fiduciary duty

A

fraud, illegality, or self dealing

will not

49
Q

Who elects the board of directors?

A

Shareholders

50
Q

Generally, shareholders (do/ do not) owe fiduciary duties to the corporation or to each other

A

do not

51
Q

Generally, directors (do/do not) owe the duty of care and loyalty to the corporation

A

Do

52
Q

Generally, officers (do/do not) owe the duty of care and loyalty to the corporation

A

do

53
Q

T/F

Shareholders are an agent and fiduciary of the corporation

A

False

54
Q

T/F

Directors are an agent and fiduciary of the corporation

A

True

55
Q

T/F

Officers are an agent and fiduciary of the corporation

A

True `

56
Q

The duty of ___ is the duty to act with the care that a person in a like position would reasonably believe appropriate under similar circumstances

A

Care

57
Q

The duty of ___ is the duty to act in a manner that the director reasonably believes is in the best interest of the corporation

A

Loyalty

must not place own interests ahead of the corporation

58
Q

What are the 2 common defenses to the allegation of self-dealing?

A

1) the decision to self-deal was properly ratified

2) the decision to self-deal was fair to the corporation

59
Q

Director voting agreements are more enforceable in ____ because the directors usually have less freedom to sell their shares and leave

A

close corporation

60
Q

A corporation may enjoy de facto corporation status if they ____
1.
2.
3.

A
  1. attempted to incorporate in good faith
  2. is otherwise eligible to incorporate
  3. subsequently acted like a corporation in good faith.
61
Q

A corporation (may / may not) be liable for the actions of its agents if the agents are acting within the scope of their employement

A

may

62
Q

The only time a shareholder will be liable is if a plaintiff is able to __ __ __ __

A

pierce the corporate veil.

BA (7 decks)

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