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Constitution Law Bar Prep > corporations > Flashcards

corporations Flashcards

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1
Q

C corps and S corps

A

C: traditional corportaion

S: taxed like a partnership but

  • limited to 100 shareholder
  • shareholders are individuals
  • one class of stock
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2
Q

key facts for corp question

A 
organization of corp
issuance of stock
directors/officers
shareholders
fundemental corp cahnge
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3
Q

what are the three reqs for foramtion of a corp

A

a person
a paper
and an act

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4
Q

incorporators

A

Basically, they must
execute and deliver the articles of incorporation to the secretary
of state. Incorporators may be a person or an entity.
They do not need to be a citizen of the state of incorporation

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5
Q

articles of incorp

A

paper needed to form corp

must have
The name and address of each incorporator
• A registered agent and the street address of the
registered office. The registered office must be in the
state. The registered agent is the company’s legal representative,
meaning they could, for example, receive
service of process for the corporation.
• Information regarding the corporation’s stock. The
articles must give details about the corporation’s authorized
stock, which is the maximum number of shares
the corporation can sell. If the company has different
classes of stock or series within a class of stock, many
states require that the articles state the number of
shares per class;

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6
Q

ultar vires acts

A

no actions outside the stated business purposes

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7
Q

must a corp be filed

A

yes with sec of state

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8
Q

initial organizational meeting

A

by named board members OR (if not named) the incorporators

adopt bylaws
appoint officers

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9
Q

bylaws

A

internal operating manual

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10
Q

internal affairs doctrine

A

internal affairs of a corp are governed by the law of state of incorporation

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11
Q

de facto corp

A

when a corp wasnt properly formed, can still have IF

relevant incorp stattue

good faith and colorable attempt to comply

exercise of corp privileges (acting like in a corp)

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12
Q

corp by estoppel

A

if dealing with corp like it was a corp, then cant say later it wasnt a corp

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13
Q

promoters raising capital and doing stuff for a copr before there is formation

A
  • partners
  • fiduciary duty of disclsure and good faith dealing
  • PERSONAL liablity if enter into contract on behalf of corp before formation
  • only relased from laiblity by express or implied novation (assumption and replacement of promoter by corp)
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14
Q

debt secuirty

A

a loan taken giving a creditor an interest to repayment plus interest

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15
Q

equioty security

A

stock

ownership investment

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16
Q

share option

A

option to purchase share in future under terms predetermined

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17
Q

issuance

A

when corp sells its own stock

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18
Q

subscription, preincrop sub,

A

sub: written offer to purchase stock from corp
preissuance: irrevocable for 6 months, payment due on demand by board

post issuance: can receive any tangible/intangibel property or services that benefit corp

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19
Q

what is the minimum consideration needed for stcok issuance

A

par: stated inital value. if less, than watered stock and violation in which shareholders can seek remedy

if no par price: than any price the board sets

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20
Q

preemptive right to percentage of owernship for shareholder

A

must be stated in articles
right to purchase newly issued stock equal to their existing percent ownership of corp

UNLESS

  • consideration other than cash
  • six mothns of incorp
  • non-voting rights with distribution preference
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21
Q

qual for a director

A

natuarl person
adult
legal capcicty

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22
Q

how many directors are needed

A

at least one, no limit on how many

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23
Q

election or director

A

yealry, unless staggered

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24
Q

can sharehilder remove a board member without cause

A

yes

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25
Q

who fills vacancies on the baord

A

either board or sharholders

if shareholders created vacancy, then they must fill, board cant fill

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26
Q

can a single board member act on behalf of corp

A

no, only as a group

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27
Q

act as a group rules for board

A

unanimous written agreemnet (email, sep dcos fine) OR

at a board meeting,

  • -satisfy qurom and
  • -majoirty vote of those present
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28
Q

can a board act if quorum is broken mid meeting

A

NO

29
Q

whats need for quorom

A

majooriyt of directors

30
Q

what acts can’t a board delegate

A

dcalration of a distribution
fill a board vacany
recommend fund change to shraeholders

31
Q

fiduciary duty of board and officers

A

duty of loyalty

duty of care

32
Q

duty of care

A

A director must discharge her duties in good faith and with
the reasonable belief that her actions are in the best interest
of the corporation.

burden on p
two isseus: nonfeasance, misfeasance

non: director does nothing/lazy

mis/ director makes decision that hurts board

33
Q

what does director need to protect against call of misfeasance

A

made a business decision in good faith and sound business judgment

34
Q

may director rely on info of others in corp

A

yes if prepared by

  • officers
  • legal counsel
  • other committees

all req reasonable belief in competence, needed skill, and knowledge

35
Q

when is a conflicting transaction (self dealing) by a director ok

A
  • approved by maj of disinterest board OR
  • approved by maj of votes entitled by disinterest sharholders OR
  • as jduged at entry of transaction by corp, was fair to corp
36
Q

what maj is needed for a conflict transaction board vote

A

maj of DISINTERSTED board members

37
Q

when analzying fairness of transaction…

A

always add “some court require a shwoing of fairness”

factors:
adequacy of comp
finacnial postiinong of corp
available alts

38
Q

remedies for conflciting transactions

A 
enjoinment
setting asside
damages
loss profits
unjust enrichment
39
Q

cna directors set their own compensetiaon

A

yes

40
Q

can directors engage in competing businesses

A

it would raise a serious loyalty issue

41
Q

corporate opp doct

A

a director can’t deprive the corpo of a business opp (something the copr would want to take advantage of) without

  • notiifcaiton
  • opp for corp to act
42
Q

directors duty to disclose

A

material corpoarte info to other board members

43
Q

what are the entire board of directors laible for

A 
ultra vires
improepr loans
breach of fiduairy duty
-duty of loaylyt
-duty of care
44
Q

how to know which directors are respon for liabille conduct

A

presumption to act with board UNLESS

  1. dissent noted in minutes
  2. dissent delviered in writing to presiding board member
  3. written dissent to corp RIGHT after meeting
45
Q

do shareholders fire hire officers

A

no, only the board can

46
Q

indemnification of officers

A

cant: officer/director laible to corp AND recieved an improper benefit

Must indemnify: d or o who successfully defended on merits (some states whole case, others to extent they win)

may indemn: if director loses or won not on merit IF: good faith, believed conduct was in best itnerst of corp

47
Q

derivative suit

A

a shareholder is suing to enforce the CORP claim. NOT thier own (that would be a shareholder suit)

ask: could corp have brought suit, if yes, then good

48
Q

difference bw breach of fiduciary duty to corp vs shraeholder

A

who suffers the most immediate harm

who did the duty run to

49
Q

who gets paid for a derivative suit

A

the corp

50
Q

standign for a derivative suit

A

stock ownership at time of wrongdoing

fair and adequate representation of corp interest

51
Q

how to initiate suit

A

must first make written demand to the corp (usually the board), can’t sue until 90 days after unless

  • demand rejected
  • irreprabable harm

copr must be joined as D

52
Q

can you dismiss or settle derivative suit without court approval

A

no

53
Q

outstanding stock

A

stock issued but not reacquired

54
Q

who votes in shareholder votes

A

outstnading stock and record shareholders

rcord: set by board, no more than 70 days before meeting

55
Q

are voting trusts allowed for shareholders

A

yes•

A written trust agreement, controlling how the shares
will be voted;
• A copy of the agreement (including names and addresses
of the beneficial owners of the trust) is given
to the corporation;Legal title to the shares is transferred to the voting
trustee; and
• The original shareholders receive trust certificates and
retain all shareholder rights except for voting.

56
Q

can you have a voting aggreement

A

yes, signed and in writing

57
Q

type of shareholder meetings

A

special and annual

58
Q

notice for sharehodlers meeting

A

between 10-60 days of meeting

date, time, place

if special meeting: purpose

59
Q

what happens if bad notice to sharholder meeting

A

any action taken is vaoibalbe

60
Q

quorum for shareholder meeting

A

number of shares represented

61
Q

what maj is needed to pass general measures at a shareholder meeting

A

maj of shares present

62
Q

what maj is needed for special matters at a shareholder meeting

A

traditionally maj of shares entitled to vote, BUT view is changing and can be expressly diff

63
Q

stock tranfer restrictions

A

fine is reasonable

64
Q

stock transfer rights to enforec agasint

A

transferee, third party IF

limitation is conspious on stock certificate OR transferee knew of limitation

65
Q

fundemental corp changes

A 
amending the article
merging
asset transfer
convert to another business form
disolving
66
Q

whats need for fund corp changes

A
  1. board action adopting
  2. board submission to shareholders WITH writtne notice
  3. shareholder approval
67
Q

can a shareholder taht dissents to a fund cahnge force corp to buy back their stock at fair value

A 
yes IF
merger
asset transfer
stock exchange acqui
converting to another biz
68
Q

who needs to approve the merger

A

merging (non-survivng) company

Constitution Law Bar Prep (16 decks)

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