Corporations Flashcards
When does corporate existence typically begin?
When the state files the articles of incorporation.
shareholder standing requirements for derivative action
The shareholder must have been a shareholder at the time of the alleged wrongful act or omission, OR become a shareholder through transfer by operation of law from one who was a shareholder at that time,
AND
he must be able to fairly and adequately represent the interests of the corporation.
proper steps for adopting a fundamental corporate change
(i) a majority of the board of directors adopts a resolution recommending the fundamental change;
(ii) notice of the proposed change is sent to all shareholders (whether or not entitled to vote);
(iii) the change is approved by a majority of all votes entitled to be cast; and
(iv) the change is formalized in articles (e.g., articles of amendment, articles of merger, etc.), which are filed with the state.
How much will a dissenting shareholder be paid for his shares?
The amount the corporation estimates as the fair value of the shares, but if the shareholder disagrees with that assessment, the corporation must either pay the amount the shareholder demands or file a court action to determine the fair value of the shares.
Can duly elected directors be removed by the shareholders?
Yes, with or without cause.
shareholder inspection rights
a shareholder who has held at least five percent of any class of the issued shares of a corporation for at least the preceding six months may inspect:
(i) the corporation’s articles and bylaws,
(ii) board resolutions regarding classification of shares,
(iii) minutes of shareholders’ meetings from the past three years,
(iv) communications sent by the corporation to shareholders over the past three years,
(v) a list of the names and business addresses of the corporation’s current directors and officers, and
(vi) a copy of the corporation’s most recent annual report.
if no shareholder meeting held within ____, shareholders can demand one
18 months
stock certificates must list:
name of corporatiOn
name of person to whom stock is issued
number and class of shares the certificate represents
consequences if annual report not timely filed:
if the corporation doesnt file annual report for 90 days, then may be terminated after a 30-day notice from secretary of state
if corporation is terminated, may filed articles of reinstatement with secretary of state within three years, and then reinstatement is retroactive to date of termination
board and bylaws powers
board may adopt amend or repeal bylaws
shareholders and bylaws powers
shareholders may amend or repeal bylaws
unanimous governance agreement
a writing separate from the articles of bylaws
stating that it is a unanimous governance agreement
filed with the corporation
effective by default for 20 years
has the effect of binding corporation, even if its provisions may be in conflict with normal corporate governance rules
may eliminate or restrict the powers of the board
govern making of distributions
establish who officers will be and what powers they will have
and many other powers
Conflicted transactions
conflict is effective against person who is party to conflicted transaction and their related parties, including spouse, sibling, parents, and child.
to cleanse:
(1) get disiinterested director approval;
(2) get disinterested shareholder approval (more votes for than against cast);
(3) prove that the transaction was fair at time it was engaged in
qualified director
a director who is
not a party to a transaction with the corporation
someone who does not have a material interest in the transaction
does not have a material relationship with someone who does
documents necessary to file to form a corporation?
file articles of incorporation with the secretary of state,
and an affidavit of consent by the registered agent of the corporation.
The articles of incorporation must state the name of the corporation, the number of shares the corporation is authorized to issue, the non-PO Box address of the corporation’s registered agent, if the corporation’s principal place of business is at a different address from the agent, then also list the business’s address, state the purpose of the corporation, and state whether the corporation wishes to waive duty of care personal liability for directors.
