Corporations

Question 1

What is a novation?

Answer 1

Agreement between ALL parties to release the person from liability

Question 2

What does a president of a corporation not have the implied power to do?

Answer 2

To take extraordinary actions not in the usual course of business

Question 3

Is a contract between a corporation and a director voidable?

Answer 3

Not if it’s solely because of the director’s relationship or interest if the contract is fair to the corporation

Question 4

How to shift burden of fairness of a contract between a director and the corporation?

Answer 4

Approval by a disinterested majority of the board

Question 5

What is the formula for cumulative voting to determine number of shares needed to win?

Answer 5

Shares needed > [(# of directors desired * total shares voting at meeting) / (Total directors to be elected + 1)]

Question 6

How many votes do you get under cumulative voting?

Answer 6

of shares * Total directors to be elected

Question 7

Under FL blue sky laws, which types of corporations don’t need to register their sales?

Answer 7

Close corporations

Question 8

What does the FL blue sky law exempt from registration?

Answer 8

Sales to less than 35 people

Question 9

What can a Florida business trust do?

Answer 9

Be merged into a wholly owned subsidiary corporation

Question 10

How is a business trust created?

Answer 10

Deed or declaration of trust, which must be filed with the Sec. State

Question 11

What do you need for a voting trust?

Answer 11

A written trust document and transfer of legal title to trustee. Trust agreement needs to be deposited with the corporation and is subject to inspection by any shareholder.

Question 12

Are voting trusts certificates transferable?

Answer 12

Yes, but the transferee is bound by the agreement

Question 13

What does 16(b) of the Securities Exchange Act 1934?

Answer 13

Corporation can recover profits realized by insiders from any purchase or sale of corporation’s securities within a 6 month period

Question 14

Appraisal rights are unavailable for who?

Answer 14

Holders of any class or series of shares that has at least 2,000 shareholders and the outstanding shares of the class or series have a market value of at least $20 million

Question 15

What is the de facto merger doctrine and has it been adopted in Florida?

Answer 15

HAS NOT BEEN ADOPTED IN FLORIDA.

Entitles shareholders of a corporation purchasing the assets of another to voting and appraisal rights

Question 16

Absent an agreement to the contrary, who is liable for the debts of a business trusts in Florida?

Answer 16

The trustees primarily, and the trust corpus derivatively

Question 17

When does Florida’s Control Share Acquisition statute apply to?

Answer 17

Any issuing public corporation having

1) 100 or more shareholders;
2) its principal place of business or substantial assets in Florida; and
3) either 1,000 shareholders or more than 10% of its shareholders resident in Florida

Question 18

Who can appoint directors if there is a vacancy?

Answer 18

Other directors until the next annual election

Question 19

Can shareholders enter into an agreement with shareholders of another corporation to manage the affairs of the corporation?

Answer 19

Yes

Question 20

What happens if a corporation fails to file an annual report with the department of state?

Answer 20

The corporation is barred from bringing any action in Florida courts until the report is filed and is also subject to involuntary dissolution

Question 21

What can a shareholder inspect if it gives the corporation at least 5 business days notice?

Answer 21

1) Article of incorporation currently in effect
2) Bylaws
3) all written communication to shareholders within the past 3 years
4) Minutes of meeting and actions taken without a meeting
5) List of name and address of current directors and officers
6) Most recent annual report

Question 22

Can a corporation lend money and credit to its officers and employees?

Answer 22

Yes when it may be reasonably expected to benefit the corporation (otherwise, no)

Question 23

What is the Deep Rock doctrine?

Answer 23

Thin capitalization but loaned the corporation lots of money–your loan will go to the end and other creditors will be paid first

Question 24

Under FL Control Shares Acquisition Act, what must happen before a majority shareholder can exercise her control shares?

Answer 24

A majority vote of the 25% minority shareholders

Question 25

If no record date, what would the record date be/the latest someone can get stock?

Answer 25

The close of business on the day before the first notice is delivered to the shareholders

Question 26

If record date set, what is the earliest it can be set?

Answer 26

No more than 70 days before the meeting

Question 27

Can majority shareholders be liable for the acts of their directors?

Answer 27

Yes, under an agency theory

Question 28

If you are the named shareholder on the record date but you sell your shares, who is entitled to vote the shares?

Answer 28

You until its recorded in the books

Question 29

How many days before a shareholder meeting must the company compile a list of shareholders of record?

Answer 29

10 days (otherwise, can demand that the meeting be adjourned)

Question 30

Are controlling shareholders liable for acts of a person they sell their stock to?

Answer 30

Yes if did not take reasonable measures to investigate the character and reputation of the buyer

Question 31

What is authorized capital?

Answer 31

Number of shares that may be issued by the corporation

Question 32

Who has standing to sue under the Williams Act?

Answer 32

Shareholder of the target company and the SEC

Question 33

When is inadequate capitalization a proper ground for piercing the corporate veil?

Answer 33

Only if it is done knowingly

Question 34

A misdemeanor may be charged with what?

Answer 34

An information, docket entry, or notice to appear

Question 35

Two possible sanctions for failing to file an annual report with the department of state?

Answer 35

1) involuntary dissolution

2) Barred from brining or defending any action in Florida courts

Question 36

What is required for court to accept guilty plea?

Answer 36

Need to determine that the defendant made a voluntary plea with a full understanding of his rights, there was a factual basis for the plea, and defendant states under oath that he accepts the plea because he is guilty or that it’s in his best interest

Question 37

Who must approve an affiliated transaction?

Answer 37

Either a majority of the corporation’s disinterested directors or 2/3 of the remaining disinterested shareholders