Corporations

Question 1

who actually owns the corporation?

Answer 1

the shareholders

Question 2

what type of management does a corporation have?

Answer 2

centralized

Question 3

definition of an officer

Answer 3

an agent acting on behalf of the BOD

Question 4

can the shareholder make day to day decisions?

Answer 4

no

Question 5

what are the only rights a shareholder has?

Answer 5

right to vote, sell, or sue

Question 6

in a partnership of 2 people, if one partner quits the business, what happens?

Answer 6

the partnership doesn’t exist b/c you need 2 or more people

Question 7

what is the internal affairs doctrine?

Answer 7

doctrine that allows a corporation to incorporate in any state they please and that state’s law will govern

Question 8

who exercises control over the corporation?

Answer 8

the BOD

Question 9

who runs day to day operation of the corporation?

Answer 9

the management (officers)

Question 10

what is the duty of the BOD?

Answer 10

to maximize shareholder value

Question 11

what is the process to amend a charter?

Answer 11

decision comes from BOD and their approval, then SH vote to change it, and if approved, then the amendment is filed

Question 12

2 types of bonds

Answer 12

(1) registered (registry)

2) bearer (coupons

Question 13

in terms of a corporation, what is conversion?

Answer 13

the ability to convert debt securities into capital stock

Question 14

what 2 things make up the structure of a corporation

Answer 14

debt and equity

Question 15

who has the power to determine the capital structure of the corporation

Answer 15

the BOD

Question 16

what are some benefits to debt for a corporation?

Answer 16

interest payments are tax deductible, debt is cheaper (leverage-lower risk), no control rights, no fiduciary duties, no statutory limit on debt, some institutional investors can’t invest in equity

Question 17

if the shareholders are unhappy with the way the corporation is run,what can they do?

Answer 17

sell their stock or sue the directors for breach of fiduciary duty

Question 18

what is the identure?

Answer 18

the contract containing the terms that govern the bond (function as the debt part of the corporation’s structure)

Question 19

do shareholders of a closely held corporation have to have a BOD?

Answer 19

no, but if they do, they have to have some reference to no BOD agreement in the charter

Question 20

what is the general rule concerning when directors are elected?

Answer 20

directors are elected at the annual shareholders meeting

Question 21

when can a director resign

Answer 21

at any time so long as they give written notice

Question 22

what must all public companies comp with?

Answer 22

SEC reporting requirements

Question 23

what are 2 ways corporation can make distributions to shareholders?

Answer 23

(1) dividends

(2) repurchase shares

Question 24

what must a corporation be, under MBCA and DGCL, in order to issue dividends or repurchase shares?

Answer 24

solvent

Question 25

what are the 2 tests by which a company can figure out if they are okay to issue dividends?

Answer 25

(1) solvency test

(2) balance sheet test