Corporations

Question 1

Promotor

Answer 1

Someone who signs contract on behalf of corporation to be formed

is procuring commitments for capital/instrumentalities on behalf of a corporation to be formed in teh future

Question 2

promotor liability

Answer 2

Promotors are personally liabile on all contracts, and this liability continues even after the corpoarrtion is formed and even if the corporation also becomes liabile on the contract by ADOPTING it

Question 3

Promotor exception

Answer 3

promotor won’t be liabile in preincoproration contract if agreement between parties expressly indicates that promotor is not to be bound - the contract is considered to be an “offer”

Question 4

Agency law -

singing as “Alex, as an Agent for Target”

Answer 4

Would release Alex, agent of personal liability

BUT, Target has to be formed! Can’t be agent of nonexistent principal

Question 5

Corproation liability for promotor contract

Answer 5

Will be liable if they ADOPT (different from ratification!)
Express: resolution by BoD with k of material facts
Implied: acquisecnce or conduct normaly constituting estoppel, such as accepting the benefits done with knowledge of material facts

Question 6

Duty of loyalty - conflicts of interest

Answer 6

Violation unless (1) fair to org at time of the transaction or (2) approved by majroity of disinterested shareholders OR (3) approved by majroity of disinterested board who had matieral terms (will still be set asside if not fair)

Question 7

loyalty - competing

Answer 7

can’t do, will result in constructive trusts of profits

Question 8

loyalty - usurping

Answer 8

cannot usupr corp opportunites, have to disclose and give time to reject opportunity (if cop has interest and expectancy in it)

Question 9

Articles of incorporation can eliminate money damages for actions taken, but NOT for

Answer 9

(1) financial benefits received by D to which they are not entitled; (2) intentionally infliected harm on teh corporatino (3) unlawful corpoate distributions or (4) intentional violatino fo criminal alw

director presumed to concur iunless they dissent in writing on the record

Question 10

officers

Answer 10

ARE agents, owe fidicuariy duties

Question 11

Corporation indemnifying officers

Answer 11

(1) if held liabile to corp or (2) held to have received improper benefit (court ruling required); corp CANNOT
(2) MUST where D/P was successful in defending on teh merits
(3) MAY for reasonable litigation expesnes if unncessfully defended on teh erits and (1) acted in good faith adn (2) believed actions were in best interest of org

Question 12

Close corporation

Answer 12

may make shraeholders liabile:
(1) general standard (sahreholders not liabile) (2) butin a close corporation, if shareholders have abused the privilege of incorporating and fairness requires holding them liabile (3) court may pierce corporate veil
A) alter ego - treating assets as personal assets
(2) under capitalization when formed

Question 13

derivitave suit

Answer 13

(1) could corporation have brought suit
(2) standing require stock ownership at time of wrong (or inherited from someone who had stock at time of wrong)
(3) fairly adn adequately represent corp interest

Question 14

Voting - shareholders

Answer 14

have to own stock on record date; proxy ok, must be authorized in writing to sec of state, good for 11 months
special meetings called by BoD, president, or hodlers of 10% of oustanding shares for proepr sharehodler puproses

To vote - quorum of outstnanding shares entitlted to vote
To approve:
(1) fundamental corporate change OR remove director: majroity of shares entitlted to vote
(2) everything else: majroity of shares that actually vote

Question 15

Voting - shareholders

Answer 15

have to own stock on record date; proxy ok, must be authorized in writing to sec of state, good for 11 months
special meetings called by BoD, president, or hodlers of 10% of oustanding shares for proepr sharehodler puproses

To vote - quorum of outstnanding shares entitlted to vote
To approve:
(1) fundamental corporate change OR remove director: majroity of shares entitlted to vote
(2) everything else: majroity of shares that actually vote

Question 16

Fundamental corporate change

Answer 16

amending articles, merging, transferring substantially all assets, converting to another form of business, dissolving

if Close corporation - dissenting rights of appraisal will allow buy out

Question 17

Exercising right of appraisal

Answer 17

• Shareholders must (1) file objection before or at shareholders meeting, (2) not vote in favor, (3) send corporation written demand for shares

Question 18

President’s authority - delegated by board

Answer 18

if something is in articles of incorporation (e.g., business can be for any purpose) can propbably delegate power to restructure, but not to sell all assets

That’s a fundamental change