Corporations Flashcards
who actually owns the corporation?
the shareholders
what type of management does a corporation have?
centralized
definition of an officer
an agent acting on behalf of the BOD
can the shareholder make day to day decisions?
no
what are the only rights a shareholder has?
right to vote, sell, or sue
in a partnership of 2 people, if one partner quits the business, what happens?
the partnership doesn’t exist b/c you need 2 or more people
what is the internal affairs doctrine?
doctrine that allows a corporation to incorporate in any state they please and that state’s law will govern
who exercises control over the corporation?
the BOD
who runs day to day operation of the corporation?
the management (officers)
what is the duty of the BOD?
to maximize shareholder value
what is the process to amend a charter?
decision comes from BOD and their approval, then SH vote to change it, and if approved, then the amendment is filed
2 types of bonds
(1) registered (registry)
2) bearer (coupons
in terms of a corporation, what is conversion?
the ability to convert debt securities into capital stock
what 2 things make up the structure of a corporation
debt and equity
who has the power to determine the capital structure of the corporation
the BOD
what are some benefits to debt for a corporation?
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
if the shareholders are unhappy with the way the corporation is run,what can they do?
sell their stock or sue the directors for breach of fiduciary duty
what is the identure?
the contract containing the terms that govern the bond (function as the debt part of the corporation’s structure)
do shareholders of a closely held corporation have to have a BOD?
no, but if they do, they have to have some reference to no BOD agreement in the charter
what is the general rule concerning when directors are elected?
directors are elected at the annual shareholders meeting
when can a director resign
at any time so long as they give written notice
what must all public companies comp with?
SEC reporting requirements
what are 2 ways corporation can make distributions to shareholders?
(1) dividends
(2) repurchase shares
what must a corporation be, under MBCA and DGCL, in order to issue dividends or repurchase shares?
solvent
