Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

MEE > Corporations > Flashcards

Corporations Flashcards

1
Q

when does a corporation begin existing

A

when articles filed by state

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

what need to be in the articles of incorporation

A
  1. name of corp
  2. number of authorized shares
  3. include name and address of incorporators and of registered agent

note: if clause limiting corporation’s purpose, activities beyond scope are ultra vires and be be enjoined

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

what is a promoter

A

someone who acts on behalf of a corporation not yet formed

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

are promoters liable for preincorporation contracts? what about once corp is formed?

A

yes to both; liability continues absent novation

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

What happens when a person acts on behalf of a corp they know is not formed

A

person who purports to act on behalf of a corp knowing there was no valid incorporation is personally liable

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

is corp liable for promoter’s k

A

only if it adopts it

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

de facto corporation elements

A

colorable compliance with incorporation statute

no knowledge

and exercise of corporate privileges

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

who is held liable for acts when no corporation is formed

A

only those who acted on behalf of the business; passive investors not liable

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

corporation by estoppel

A

when people treating business as valid corporation are estopped from denying corporation’s existence and vice versa

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

do all states recognize de facto and estoppel corps

A

no

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

when will the court pierce the veil (3 things)

A
  1. alter ego
  2. inadequate capitalization at inception
  3. prevent fraud
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

when does the alter ego pierce the veil

A

in close corps where
1. shh abused privilege of incorporation
2. fairness must hold them liable

note: sloppy administration is not enough

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

preventing fraud to pierce the veil

A

when corp is hiding money; cannot be formed to avoid existing or future liability

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

when does inadequate capital pierce the veil

A

if corporation inadequately capitalized at formation, will pierce the veil

note: more likely to do this with tort claimants than k

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

what happens when court pierces the veil

A

generally, only active shareholders are liable for corporate debt

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

two ways to create capital

A

debt securities (bonds)

equity securities (stocks)

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

issued and outstanding stocks

A

shares sold to investors

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

subscription agreement rules

A

preincorp subscription agreements are irrevocable for 6 months

most incorporation subscription are irrevocable until accepted

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

what is acceptable consideration for share

A

any benefit to the corporation; traditionally cash, property, or services

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

how much consideration is needed to issue shares

A

MBCA: amount set by directors and good faith valuation

Traditional: par value

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

do shh run the corporations

A

no unless closely held corporation dispenses with board and runs through different scheme

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

how to shh control corporations

A

indirectly through electing directors, amending bylaws, and approving fundamental changes

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

what is a record shh

A

shh of record on the record date have a right to vote
- at annual meeting
- regarding fundamental corporate changes

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

what notice must be given to shh for meetings

A

annual - date, time, location
special meeting - date, time, location, and purpose

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

what happens if there’s improper notice for shh meeting

A

any action taken at meeting can be nullified unless waives

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

how do proxies work

A

allow someone to vote for shh; written valid for 11 months

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

are proxies revocable

A

yes unless 1. specifically provide otherwise and 2. coupled with interest

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

how are proxies revoked

A

attendance, later appointment, or writing

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

what is a proxy solicitation? what rules?

A

efforts made to get shh to vote a certain way

must fully and fairly disclose all material facts, no misstatements

30
Q

when are self interested dealings allowed under duty of loyalty

A

when dislocate all material facts and voted and;

transaction was fair to company

31
Q

how much for a quorum for board? voting?

A

majority unless otherwise states; majority of votes of those present

32
Q

how much for quorum for shh? votes?

A

majority of outstanding shares

elect director - plurality
remove - maj entitled to vote
fund corp. change - man entitled to vote
other matters - maj. actually vote

33
Q

how does cumulative voting work

A

top however many are elected

multiply shh number of shares times number to be elected; can split shares however

34
Q

how can shh pool power?

A

voting trusts (shh transfer ownership to trustee who votes as agreed)

voting agreement

35
Q

are shares alienable

A

generally yes, but may have reasonable restrictions

used in close corps

36
Q

is right of first refusal reasonable

A

yes

37
Q

what rights do shh have in inspection

A

limited - books, papers, accounting records –> 5 days notice and proper purpose

unqualified - articles, bylaws, general stuff

38
Q

what is a preemptive right

A

right to purchase shares to maintain proportionate ownership interest

under MBCA right exists only if provided for

39
Q

what does preemptive right not apply to

A

a. Shares issued as compensation
b. Shares issued within six months of incorporation
c. Shares issued for consideration other than money
d. Nonvoting shares with a distribution preference

40
Q

direct vs. derivative shh suits

A

a. Direct suit is to enforce right of shareholder
b. Derivative suit is to enforce a right belonging to corporation

41
Q

what standing is needed for a derivative suit

A
  1. owned shares at time of wrong
  2. maintain shares through suit
  3. demand board to bring suit (unless futile)
  4. corp must be joined as D
42
Q

when does derivative suit get dismissed? what happens to the shh who loses?

A

if a majority of directors with no personal interest determine in good faith that suit is not in best interests of corporation

if shh loses, no recovery for fees; if unreasonable, must pay D’s litigation expenses

43
Q

is there a right to distributions?

A

no unless declared by board

44
Q

when can corp not make distributions

A

when corp unable to pay its debts as they become due or

total assets are less than total liabilities

45
Q

when is a director liable for distributions

A

1) Director who votes for an unlawful distribution is personally liable for the excess
2) Director may seek contribution from other directors who voted for distribution
3) Directors may recover from a shareholder who received a distribution knowing it was unlawful

but may rely on good faith defense

46
Q

are shh fiduciaries

A

no, unless shh in close corporation

47
Q

how do directors vote

A

must attend in person (no proxies) or online where all can simultaneously here each other

48
Q

what notice needed for director meetings

A

none for regular, 2 days for special (no purpose needed)

49
Q

can directors delegate to executive committees?

A

yes, they can exercise authority given, but the committee may not declare distributions, fill board vacancies, or amend bylaws

50
Q

how are directors generally protected from liability

A

business judgment rule

51
Q

business judgment rule

A

good faith

care of a person in like position

best interest of the corp

52
Q

can articles further eliminate director liability?

A

yes, can eliminate all liability but
1. wrongfully received financial benefits
2. unlawful distributions
3. intentional crimes/torts

53
Q

what duties do directors have

A

loyalty (good faith with reasonable belief that actions are in best interest of the corporation) and care (reasonable person in like position would reasonably believe appropriate under the circumstances)

54
Q

corporate opportunity doctrine

A

director may not divert business without giving corporation first shot

55
Q

can director be indemnified for legal expenses in defending

A

yes if won;

if didn’t win, discretion under bjr

56
Q

Are there required officer positions in a corporation

A

MBCA does not require any particular officers

57
Q

how are officers appointed and removed

A

appointed by board

removed by board

58
Q

what is officer authotiry

A

actual authority given by board

apparent authority to do whatever someone in their position would normally have authority to do

59
Q

types of fundamental corporate changes

A

Amendments to articles, mergers, consolidations, share exchanges, dispositions of
substantially all assets outside of the regular course of business

60
Q

procedure for fundamental corporate change

A
  1. Board resolution
  2. Notice to shareholders
  3. Shareholder approval
  4. Articles of the change filed with the state
61
Q

who must approve merger

A

directors and shh of both corporations
exception: parent who owns 90%+ of subsidiary

62
Q

what is the appraisal remedy

A

shh can force corp to purchase their shares at a fair price if they
1. give notice before vote
2. do not vote in favor of change
3. demand payment after change is approved

63
Q

when does voluntary dissolution happen in corporation

A

if shares not yet issued, majority of incorporators or initial directors can dissolve

after shares issued, may dissolve by corporate act

64
Q

what happens at dissolution

A

corporation continues to exist to wind down

65
Q

what happens if new claim arises after dissolution

A

if money to shh already , can try to get pro rata share

66
Q

can corporation cut short time for bringing known claims

A

yes upon dissolution

67
Q

administrative dissolution

A

dissolve for failure to pay fees of penalties or file etc

68
Q

judicial dissolution

A

AG may seek if corporation is fraudulent

shh may seek if
1. directors deadlocked
2. directors acted illegally/fraudulently
3. shh deadlocked in vote
4. corporate assets being wasted

69
Q

de jure corporation elements

A

person; paper; act

+ organizational meeting

70
Q

creditor dissolution

A

corporation has admitted in writing that claim is due and corp is insolvent; or

creditor’s claim deducted to judgment, execution, and corporation is insolvent

MEE (7 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions