Corporations

Question 1

promoter’s liability with regard to a pre-incorporation contract on behalf of the corporation

Answer 1

Generally personally liable, unless there is a subsequent novation

Question 2

Articles of Incorporation Requirements

Answer 2

Corporate name; Name and address of corporations registered agent/incorporators; manner in which the corporation is to be governed; Principal office mailing address; and Number of authorized shares.

Question 3

Officers of a GA Corporation

Answer 3

Georgia does not specify which officers a corporation must have.

Georgia requires that a corporation have at least one officer.

A Georgia corporation may designate the officers it wants in its bylaws.

Question 4

Insider Trading

Answer 4

A person who possesses material information that is not public knowledge only incurs liability when she also trades on the basis of such knowledge.

A person who is not a director or officer of the corporation but who has a relationship with the corporation that gives that person access to nonpublic corporate information may incur liability when he trades stock on the basis of that knowledge.

An employee of a corporation who uses nonpublic information for personal gain may be liable for violation of federal security laws.

Question 5

Who Can Petition the Court for Involuntary Dissolution

Answer 5

A shareholder; a judgment creditor, attorney general

Question 6

Voluntary Dissolution

Answer 6

BEFORE:
majority vote of the incorporators/initial directors; file articles of dissolution w/SOS

AFTER:
resolution adopted by BOD; majority SH approval; and file notice w/SOS

Question 7

Director Indemnification

Answer 7

Mandatory Indemnification:
Required to indemnify for any reasonable expenses incurred in the successful defense; must be successful on the whole claim.

Prohibited Indemnification:
Prohibited from indemnifying against liability arising from an improper personal benefit.

Permissive Indemnification:
May indemnify even in an unsuccessful defense of a suit if acted in good faith with a reasonable belief that his conduct while acting in official capacity was in the best interest of the corp. OR,
his conduct while not acting in official capacity was not in conflict with the best interests of the corp AND,
indemnification approved by majority of disinterested directors or committee, uninterested SH, or independent counsel.

Question 8

SH Right of Appraisal

Answer 8

A SH who objects to a fundamental corp. change may be able to face the corp. to buy his stock at FV determined by an appraisal.

Question 9

SH Appraisal Rights

Answer 9

My Silly Sister Ate an Apple

Mergers;
Share exchange;
Sale of all/substantially all assets;
Amendment to AOI that adversely affects rights;
Any corp. action pursuant to SH vote.

Question 10

Statutory Close Corporation

Answer 10

Georgia permits a corporation to register as a statutory close corporation if it has 50 or fewer shareholders and the articles of incorporation state that it is a statutory close corporation.

Question 11

S Corporation

Answer 11

To become an S Corporation, the corporation can have no more than 50 shareholders and must have the consent of each shareholder.