Corporations Flashcards

You may prefer our related Brainscape-certified flashcards:
1
Q

What MUST be in the articles of incorporation?

A

(1) name and address of corporation
(2) name and address of incorporators
(3) name and address of each registered office and registered agent (with agent’s written acceptance)
(4) Number of authorized shares

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Beyond the 4 requirements to incorporate, can the articles of incorporation include other provisions?

A

Yes- can include ANYTHING not inconsistent with law, regarding managing the business or defining powers of the corporation, directors and shareholders.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are the statutory requirements for a director?

A

Must be a natural person (not a corporation) and 18 or older.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What is the minimum number of directors required if the articles or bylaws are silent?

A

one or more

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

How many incorporators are required?

A

one or more people or entities (such as corp, partnership or assoc) NO OTHER REQUIREMENTS (age, residency, citizenship etc)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

How old must an incorporator be?

A

Any age - no requirements as to age, residency or citizenship

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Abe wants to form a business but likes working alone. He comes to you to ask if he can be the sole incorporator, shareholder and director. What do you tell him?

A

He can - one person may fulfill all of these roles in a corporation. One or more natural persons or corporations can act as incorporator and a FL corp can have as few as 1 director and 1 person can hold all stock.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Promotor liability

A

A promotor purporting to act on behalf of a corporation knowing there was no incorporation is jointly and severally liable for all liabilities created while acting.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Harold contracts with companies on behalf of Z Corp prior to Z corp’s incorporation. After Z Corp incorporates, what is Harold’s risk as to liability for those contracts?

A

Harold would still be liable under the contracts. Adoption of a contract may be express or implied, but merely incorporating is not sufficient to constitute adoption.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is the only way that a promotor can avoid liability on a preincorporation contract?

A

If there is a novation where the corporation, promoter and the third party agree to substitute the corporation for the promoter as the one liable on the K.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Harold enters into contracts prior to Z corp incorporation for rental space. Z Corp then moves into the space, knowing of the lease. Who is liable on the contracts?

A

Both Z Corp and Harold. Corporations are liable on pre-incorporation contracts if they expressly or impliedly adopt the contract. Express adoption occurs when the board passes a resolution adopting the contract. Implied adoption occurs when the corporation knowingly accepts the benefits of the contract. Because Z corp knowingly accepted the benefit by moving in to the leased space, it is liable.

Harold is also liable. Adoption does not free a promotor from liability - it only means that the corporation is liable too. The only way for a promotor to escape liability is through novation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Subscription

A

A contract (signed, written offer) under which the subscriber agrees to purchase a certain number of shares from the corporation at a specified price.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

When is a subscription revocable?

A

Pre-incorporation subscription agreements are irrevocable for 6 months unless the agreement provides otherwise or all subscribers consent to revocation.

Post-incorporation subscriptions are revocable until the board accepts them.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

When is a subscription enforceable?

A

Once the board accepts it. Then, the corporation can sue the subscriber or sell the shares to someone else if payment isn’t made within 20 days of a written demand from the corporation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Can a preincorporation subscription agreement be rejected by the corporation after incorporation?

A

YES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Ryan mailed articles to the department of state to incorporate his business. A week later he enters into a contract on behalf of the business. However, the articles of incorporation were lost in the mail and a corporation was never formed. Is Ryan liable on the contract?

A

No -all persons purporting to act on behalf of a corporation knowing there was no incorporation are jointly and severally liable. however, a defacto corporation is found to exist if there was a good faith effort to incorporate, colorable compliance with the law and actual use of corporate status (acting OBO corporation)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Corporation by estoppel

A

An equitable doctrine that may be applied when someone has dealt with a defectively formed corporation as if it were a legal corporation. That person may be estopped from later arguing that the business isn’t a corporation (meaning, they can’t avoid contracts or try to hold s-holders personally liable on grounds of defective corporate status). However, this doesn’t apply to tort claims.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

On December 1, Dan, the sole director of X corp, issues 100 shares of stock to Harry for $10,000. The same day, Dan issues 500 shares to himself. On December 24, Dan issues another 100 shares for $100,000 to George. who can bring a derivative suit?

A

Harry only. Harry can bring a derivative suit because Dan breached his fiduciary duty of loyalty based on self-dealing. George cannot bring suit because the claim accrued before he became a shareholder.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Do shareholders have the power to run the day to day affairs of the corporation?

A

No - unless they agree to dispense with the board or restrict the board’s powers by shareholder agreement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Y corp is a wholly owned subsidiary of X corp. They have separate bank accounts and records, but both operate out of the location owned by X corp. they have interlocking directors. Y corporation is indebted to Zander. From whom can Zander recover?

A

Zander can recover from Y corporation ONLY. A subsidiary is generally treated as an entity distinct from its parent. However, if the subsidiary is inadequately capitalized, its operations or assets are intermingled with the parent’s or its business is operated solely for the benefit of the parent, both the parent and subsidiary will be treated as a single entity, thereby rendering the parent liable for the debts. Here, there is no basis to pierce the corporate veil because Y corp is operated independently as evidenced by the separate bank accounts and records.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

X Corp sells bar review courses. X corp president wants to sell hula hoops. X corp buys 1 million hula hoops from Y corp. Is X corp bound by the agreement?

A

No, because the purchase was unusual and not in the ordinary course of X’s business. X would’ve needed to actual authority for this type of decision from the board of directors. The president usually has implied authority to do all acts necessary and proper in the usual course of business, but doesn’t have implied power to take extraordinary actions not in the usual course of business.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Joe is president of Y Corp, a machinery company. He enters a contract to buy machines and signs “Joe - Y Corp Inc” with a corporate seal. Who is liable on the contract

A

Only Y Corp. The authority of corporate officers is governed by the law of agency. An agent’s authority may be actual or apparent and has the power to bind the corporation (his principal) in contractual dealings with third parties. The K adequately indicates the representative capacity in which Joe signed and thus only his principal (the corp) is liable. It would’ve been better though for joe to sign “as president on behalf of Y corp”

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Is the issuance of stock usual and ordinary?

A

No - thus it is not within the implied power of hte president

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Is notice of a REGULAR meeting required?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

The directors of Y corp have a special meeting. Amy does not get notice. However, she attends and participates in the meeting without objection. Is the meeting valid?

A

Yes - by attending and participating, she waived the notice requirement and the meeting is valid.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

At a meeting of shareholders, where the articles are silent, what constitutes quorum?

A

A majority of the shares entitled to vote

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

What is the minimum quorum for shareholders that the articles can provide for?

A

1/3 of the shares entitled to vote (it can never go below 1/3 of the shares entitled to vote)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

Is a contract between a corporation and a director automatically void or voidable?

A

Not if it is fair to the corporation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

A director enters into a contract with the corporation. What is the effect of approval by a disinterested majority of the board after full disclosure?

A

It shifts the burden of proving unfairness onto the person contesting the contract.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Directors elected by a class of stock may be removed…

A

ONLY by vote of that class of stock

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

When can’t a director be removed if a corporation has cumulative voting?

A

She can’t be removed if the votes cast against her removal would be sufficient to elect her at an election of the full board

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

Cumulative voting

A

Cumulative voting means that each shareholder is entitled to a number of votes equal to the number of his voting shares multiplied by the number of directors to be elected and may cast his votes for any one candidate or divide them among any number of candidates. Whether a shareholder has enough voting strength to elect a director with cumulative voting depends on the number of shares the shareholder has, the number of directors being elected and the total number of shares voting at the meeting.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

Florida’s blue sky law

A

Close corporations usually don’t need to register their sales. They only must do so when there are more than a specified number of purchasers. (yes, that’s the exact language from the book. just memorize it)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
34
Q

When can a shareholder maintain an action to involuntarily dissolve a corporation?

A

when
(1) the corporate assets are being misapplied or wasted or cause material injury to the corp or
(2) the directors or those in control of the corp have are acting in illegal or fraudulent manner
(3) deadlock of directors AND corp threatened with iireparable injury or biz can’t be conducted
(4) shareholders are deadlocked in voting power and unable to elect successor director

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
35
Q

Can a business trust engage in banking or security business?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
36
Q

Can a business trust be sued as an entity in the name of the trust?

A

No - the trustees are the named party in a suit against a Florida business trust

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
37
Q

Does the RAP apply to a business trust?

A

No - RAP doesn’t apply to a business trust whose shares are freely transferable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
38
Q

Can a business trust be merged into a wholly owned subsidiary corporation?

A

Yes - in such a merger the corporation survives and the trust disappears. A merger is initiated by the trustees who adopt a plan of merger which then must be approved by an absolute majority of the shareholders of the trust. The trust becomes effective upon filing articles of merger and has same effect as corporate merger.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
39
Q

Bob forms Y corporation. He is the only director and shareholder. Y corp issues Bob 100 of its 1000 authorized shares. Bob then sells the corporation 50 acres of land for $25,000. The land was last appraised at $15,000. Can the corporation recover from Bob?

A

No - the promotor hasn’t violated his fiduciary duty to the corporation since the promoter, being the sole shareholder at the time, wasn’t harmed and the corporation, being the same entity, is estopped from complaining. However, defrauded investors could have a c/a against promoter under state or federal securities law.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
40
Q

What is quorum for directors if the articles and bylaws are silent?

A

majority of total directors (counting vacancies as absent)

41
Q

What’s the minimum quorum allowed for directors in the bylaws and articles of incorporation?

A

Not less than 1/3

42
Q

Dan knows X corp is about to produce a financial statement show substantial drop in profits. He discusses with his lawyer, Abe, who owns a substantial amount of X stock. Abe tells his broker to sell all X stock immediately. Harry, knowing nothing of the situation, buys Abe’s stock from Abe’s broker. Under federal securities law, what duties does Abe have?

A

Abe must tell Harry of his knowledge. This is not true at common law.

43
Q

C Corp decides to distribute dividends totaling $400k. Who gets dividends if the oustanding stock is 100K shares of common and 20k shares of $2 preferred?

A

Preferred shareholders get paid $2/share dividends off the top. The common shareholders then split the balance.
Subtract 40k of preferred from 400k = 360k.
Then 360k/100 shares = $3.60 /share pro rata basis.
So common shareholders get $3.60/share

44
Q

The board of C Corp. decides to distribute dividends totaling
$400,000. Who receives dividends if the outstanding stock is 100,000 shares of common and 20,000 shares of $2 preferred, where preferred shares are also participating?

A

They would get paid off the top $2/share. Then, they would get a share in the distribution of the 360k balance.
20k x $2 = $40K
400k - 40k = 360k
360/120 shares = 3.
3 + 2 = 5 so participating gets $5/share and common share gets $3/share.

45
Q

Section 16(b) of the securities exchange act

A

Applies only to insiders
Doesn’t require fraudulent intent or negligence
Applies to short-swing profits

46
Q

Unless the amendment is one that a board can adopt without shareholder approval, amendment of articles of incorporation must:

A

(1) be approved by a majority of votes entitled to be case on the amendment
(2) be approved by majority of nay class adversely affected by amendment
(3) may effect any lawful and proper provisions

47
Q

Shareholders who disagree with a fundamental corporate change are entitled to appraisal rights unless

A

they are holders of a class that has 2k shareholders and the oustanding shares of the class has a market value of at least $20 mil

48
Q

Mergers require the approval of

A

an absolute majority of the s-holders

49
Q

Short mergers of an 80% owned subsidiary into a parent corporation are permitted…

A

without shareholder approval

50
Q

De Facto merger doctrine

A

entitles the shareholders of the acquiring corporation to vote. Fl has no case law accepting or rejecting this

51
Q

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

A

The trustees primarily and the trust corpus derivatively

52
Q

Is dissolution ever mandatory?

A

No - it’s always in the courts discretion

53
Q

Tender offer

A

public invite to s-holders of corp to sell their shares to the offeror, usually at a premium over current market price. Primary weapon of raiders attempting to wrest control from incumbent management.

54
Q

Florida Control Share Acquisition Statute

A

Purpose is to protect corps from outside takeovers. Gives corps the ability to prevent or restrict changes when someone gets too much power.

applies to corps with
(1) 100+ s-holders
(2) PPB/ substantial assets in FL AND
(3) 1000 s-holders or more than 10% residents of Florida

A corp can opt out of protection before a takeover.

55
Q

At a special meeting, shareholders pass an amendment to bylaws to expand board of directors from 5 to 7 directors. They also vote to remove Adam as a director. At the next meeting of the board of directors following the s-holders meeting, the 4 remaining directors may:

A

Either elect a new director to complete Adam’s term or elect 2 new directors pursuant to amended bylaws. Any vacancy on the board may be filled by the remaining directors until the next annual election unless the articles provide otherwise

56
Q

D Corp was voluntarily dissolved. One months later, A sues D Corp on a K existing at the time of the dissolution. After initiation of A’s suit, the directors distributed all of D’s assets to themselves as s-holders in liquidation. Can A recover damages from D’s s-holders as result of the suit?

A

Yes, D Corp’s shareholders will be personally liable to the extent of assets received in liquidation. A director is liable to the corporation for the amount of distribution that exceeds what would’ve been properly distributed if he willfully/negligently votes for distribution of corporate assets to shareholders during liquidation if afterwards
(1) corp can’t pay its debts or
(2) total assets are less than total liabilities
Creditors can recover the amount directly from the shareholders.

57
Q

A majority of A corp shareholders vote to merge with B corp. C Corp owns a majority of B corp and is a substantial shareholder in A Corp, owning 15%. The shareholders of A Corp enter into a shareholder agreement pending the merger with B Corp to allow C Corp to take over management of A Corp. What result?

A

The shareholders may unanimously agree to transfer to C Corp the authority to exercise the corporate powers and to manage the business of the corporation. FL Law allows a broad range of shareholder agreements, including transferring to any shareholder or other person the authority to manage the business and affairs of the corporation.

58
Q

Will a director be held personally liable to the corporation for breaches of duty of care?

A

No

59
Q

A Corp is a real estate development company. A Corp’s president pledges all of the corporation’s assets to borrow funds from Bank for development of the corporation’s property. What result?

A

President likely acted within her apparent authority in pleding assets. The president f a corporation has implied authority to do all acts necessary and proper within the usual course of business.

60
Q

A Florida corporation must have:

a. a president

b. a board of directors

c. a resident agent

d. all of the above

A

A resident agent. A president is not required (only needs to have whichever officers it has described in its bylaws). No board of directors is needed - if articles or bylaws allow for it, the s-holders may manage the corp.

61
Q

Who are appraisal rights not available for?

A

the holders of any class or series of shares that are traded on a national securities exchange

62
Q

What happens if a corp fails to file an annual report?

A

It can’t bring an action in FL until the report is filed and the corp risks administrative dissolution (involuntarily dissolution).

63
Q

What is the minimum number of directors a corp can authorize to constitute quorum if its board is made up of 9 directors?

A

3 (cant be less than 1/3 of board)

64
Q

What can a committee NOT do?

A

(1) amend bylaws
(2) fill vacancies on board or board committee
(3) authorize reacquisition of shares except w/in limits set by board

65
Q

Is there a minimum stake that a shareholder needs to be able to inspect corporate records?

A

No - any shareholder may inspect

66
Q

Absolute right to inspect - FL corps and foreign corps

A

On 5 days written notice, A shareholder of FL corp or foreign corp authorized to do business in FL who resides in FL is entitled to inspect:
the bylaws and a list of names and business address of the current directors and officers

67
Q

Absolute right (regular business hours)

A

Every shareholder has an absolute right to inspect, during regular business hours:
articles
bylaws
minutes of meetings by s-holder
records of actions taken by s-holders w/o meeting
-names & addys of current directors & officers
-most recent annual report

68
Q

right to inspect

A

may inspect:
1. minutes of any meeting of board
2. records of actions taken w/o meeting by board
3. financial statements and
4. accounting records of corp
5. record of s-holders
6. any other books and records

procedure: 5 business days in advance
(1) if demand made in good faith & for proper purpose
(2) s-holder describes w/ reasonable particularity their purpose and records they want to inspect and
(3) records are directly connected to purpose

69
Q

In FL, corporate existence begins when

A

when the department of state files the articles of incorporation. If DOS finds the articles conform to law and all filing fees and charter taxes paid, it files the articles.

70
Q

A corporation was established with $30k in capital. In the first year, the corporation incurred $40k in expenses. The company earned $100k in income. How much money is available for distribution in dividends, assuming the company wants to distribute the maximum amount allowed?

A

90k. 100k + 30k = 130k - 40k = 90k

71
Q

Who is usually liable where there is a business trust?

A

Trustees of a business trust are usually personally liable to trust creditors. However, exculpatory clauses are common and valid. Absent those clauses, even if trustee is liabile, they’ll probably be indemnified.

72
Q

Certain directors and shareholders of X corp wish to amend its articles of incorporation. The amendment will adversely affect holders of nonvoting common stock. What result?

A

Where a proposed amendment to articles of incorporation would adversely affect the rights of a class of shareholders, those shareholders are entitled to vote as a group on the amendment even if they belong to a nonvoting class.

73
Q

Lois owns 20% of common stock of L Corp. In which of the following situations would she be able to exercise preemptive rights?
(1) when L’s articles of incorporation provide that “the corp elects to have preemptive rights” and L decides to issue 100k new shares of common stock.
(2) when L’s articles of incorporation provide that “the corporation elects to have preemptive rights” and L decides to issue 100k new shares of common stock in exchange for the industrial warehouse of a competitor

A

She’d only be eligible in the first situation. Preemptive rights entitles the holder to keep an equal share in the company when shares are issued for MONEY.

74
Q

Z Corp sells bar exam courses as per the sole purpose within its articles of incorporation. Recently Z corp entered in to K with Nannie’s Nursery to purchase childcare franchises. Z Corp defaults on the contract. Is Z Corp liable?

A

Yes - if a corp enters into a K beyond its powers to act, that fact generally cannot be used as a defense to enforcement.

75
Q

How can acts that a corporation takes beyond its purpose be challenged?

A

(1) in a proceeding by shareholder to enjoin corp’s actions
(2) in direct or derivative action by corp agaisnt director, officer, employee or agent
(3) in proceeding by Dept of Legal Affairs to enjoin corp from unauthorized business.

76
Q

If a corporation takes actions beyond its stated purpose, are the shareholders personally liable?

A

No

77
Q

Z Corp sells bar exam courses as per the sole purpose within its articles of incorporation. Recently Z corp entered in to K with Nannie’s Nursery to purchase childcare franchises. If shareholders move to enjoin Corp A from continued operation of childcare franchises what will the court do?

A

Court can enjoin the corp from continuing operation of the childcare franchises past the date the K’s expire. No existing K can be enjoined unless all parties to K are before court and court finds it equitable to do so - so it wont touch the xisting ones.

78
Q

Are general requests to inspect permitted?

A

No

79
Q

Affiliated Transactions

A

An affiliated transaction (such as merger or sale of substantial assets) with an interested shareholder owning more than 15% of corporation’s shares must be approved by:
1. a majority of corp’s disinterested directors or
2. 2/3 vote of disinterested s-holders, unless consideration to be received by remaining public s-holders is fair or other exception is met

80
Q

Business trusts can engage in any business except..

A

banking or security business

81
Q

The articles of incorporation for Number One Corporation grant to its board of directors the power to take any action as authorized by law. Which of the following actions by the board of directors must also be approved by the shareholders of Number One Corporation?

(A) Extension of the duration of Number One Corporation if it was incorporated at a time when limited duration was required by law.
(B) Merger of Number One Corporation into another corporation with the other corporation becoming the surviving corporation.
(C) Changing of the corporate name to Number One, Inc.
(D) Changing of the par value for a class of shares of Number One Corporation

A

Merger of Number One Corporation into another corporation with the other corporation becoming the surviving corporation.

82
Q

Jane discovers that Ted, one of the 5 directors of the corp, has been violating his employment contract. She wants to bring a derivative suit. Can the other directors stop her?

A

Yes, she may be prohibited from bringing a suit by the court if the other 4 directors determine, after reasonable investigation, that the suit is not in the best interests of the corporation.

83
Q

A nonshareholder wants to vote at the January 20 shareholders’ meeting of X Corp. Neither the bylaws nor the BOD have set a record date. When is the latest day which A may purchase shares to be able to vote?

A

COB the day before the first notice of the meeting is delivered to the shareholders. Record date is fixed by the board of directors and may not be more than 70 days prior to the meeting. This is the rule if no record date is fixed by the board.

84
Q

How much notice does a shareholder need to give to inspect books?

A

5 business days before the date he wants to inspect them

85
Q

For a shareholder agreement to be enforceable it must be:

A

In writing and signed by the shareholders in question.

86
Q

Are shareholders liable for the debt of the corporation?

A

No

87
Q

Can the president and treasurer be the same person?

A

Yes, regardless of shareholder approval. They are elected by BOD.

88
Q

Does a promoter have a fiduciary duty to the corporation?

A

Yes

89
Q

Is a controlling shareholder liable for directors that he nominated to the BOD?

A

Yes

90
Q

What can the BOD do without shareholder approval?

A

(1) extend duration of corp if incorporated at a time when limited duration was required
(2) delete the names and addys of the initial directors and any other info that is solely of historical interest and
(3) make certain changes to the corporation’s name

91
Q

How long are proxies valid for?

A

11 months unless otherwise stated

92
Q

A sells 100 shares to B but the shares aren’t transferred from A to B on the corporate books. A but not B received notice of a special shareholder meeting. Who can attend?

A

A, but not B can attend and vote. The holders of voting shares on the record date, as shown on the stock transfer books of the corporation, are eligible to vote at shareholder meetings and entitled to notice.

93
Q

The BOD called a special meeting of the shareholders to vote on proposed merger with another corp. What must the corp do before the meeting?

A

At least 10 days before each shareholders’ meeting, a corp must compile a complete list of the shareholders of record entitled to vote at that meeting. The list is kept on file and subject to inspection by any shareholder and during the meeting. If the corp fails to comply, any shareholder may demand that the meeting be adjourned.

94
Q

Are voting trust certificates transferable?

A

Yes

95
Q

Dexter, a controlling shareholder, sells his shares to another person who loots the company. Is Dexter liable to the corporation?

A

No, if he took reasonable measures to investigate the person’s character and reputation. Otherwise, he will be liable.

96
Q

Authorized capital

A

The number and kind of shares that may lawfully be issued by the corporation as provided in the articles of incorporation. A corp may issue fewer shares than authorized, but may never issue more unless articles are amended to provide for additional shares.

97
Q

Albert is given 1000 shares as part of his compensation for his labor. Can shareholders get premptive rights of those shares?

A

No

98
Q

Who determines whether corporation received adequate consideration for shares?

A

The BOD - conclusively