Corporations Flashcards
de facto corp
business that doesn’t fulfill filing formalities may nonetheless be treated as a corp if organizers have made a good faith, colorable attempt to comply with corp formalities and have no knowledge of the lack of corp status
piercing the corporate veil
avoid fraud or unfairness and to render SHs liable to 3rd party victim
what does piercing the corporate veil require
SHs treat corp as their alter ego by failing to observe sufficient corp formalities OR corp is under capitalized
who is liable when the corporate veil is pierced
SHs active in operation of corp or D
- courts are more willing to pierce veil for tort victim rather than K claimant
promoter
person acting on behalf of unformed corp
- liable until novation
- solely liable if corp never formed
corp formation requirements
- general purpose with perpetual duration valid and presumed (unless specific statement of purpose or limited duration)
- agent and address of registered office
- incorporators names and addresses
- name of corp with some indicia of corp status
ultra vires
- if specific purpose in statement of purpose, activities that go beyond
- ultra vires Ks are valid
treasury stock
stock previously issued and reacquired re-sold as no par
duty of care
must act with care a prudent person would use with regard to her own business
duty of loyalty
may not receive an unfair benefit to detriment of corp or SHs unless there has been material disclosure and independent ratification
- may not self deal
- may not usurp corp opportunity
a corp comes into existence when
a charter is obtained by the state
advantages of the corp form
- SHs, owners, have limited personal liability for corp debts and are ordinarily subject to lose only their investment in shares
- SHs may freely transfer ownership rights
- corp may have perpetual life
- corp has a regular form of mgmt decision making established by statute
combinations of businesses a corp may not engage in under TBOC
- raising cattle and owning land therefor while operating stockyards and slaughtering, canning, curing meat
- petroleum oil producing business while in the oil pipeline business
a director owes a fiduciary duty to her corp and is restricted from profiting at the…
expense of the corp
notice of special meetings
required
existing SH may exercise her preemptive rights to…
maintain her proportional voting strength
any SH who has been a holder of record for at least 6 months or who owns at least 5% of the outstanding shares of the corp has the right to…
examine the corp’s books and records
the share certificates of a close corp must conspicuously indicate
close corp status
unless otherwise provided in the certificate of formation, a majority of shares entitled to vote, represented in person or by proxy constitute a…
quorum (may never consist of less than 1/3 of shares entitled to vote)
SHs in a de jure corp are under an obligation to the corp or its director to…
pay full consideration for the shares
SH will not be liable for any K obligation of a corp on the basis of actual or constructive fraud unless…
the obligee demonstrates the SH caused the corp to perpetrate an actual fraud on the obligee for direct personal benefit of the SH
the initial board of directors, if chosen, must consist of ____ or more persons
one
a proposed corp name may be reserved for ____ days by application to the secretary of state
120
the certificate of formation must contain…
- the initial directors
- name of the corp
- purpose of the corp
- duration of the corp if not perpetual
- capital stock structure and SHs rights
- name and addresses of the corporate agent
- names and addresses of the organizers
