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Corporations Florida Flashcards

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1
Q

s

How may a person become a member of an LLC?

A

(1) as provided in the operating agreement;
(2) as the result of a merger, an interest exchange conversion, or domestication;
(3) with the consent of all the members; or
(4) when a dissolved LLC has not had members for 90 consecutive days, by consent of transferees owning the right to receive a majority of the distributions.

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2
Q

The presumption about LLC’s is that they are managed by

A

its members

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3
Q

An LLC is dissolved and must wind up its business upon the occurrence of:

A

i) An event or circumstance that the operating agreement states causes dissolution;
ii) The consent of all the members; or
iii) The passage of 90 consecutive days during which the company has no members, unless (a) consent to admit at least one specified person as a member is given by transferees owning the rights to receive a majority of distributions; and (b) at least one person becomes a member in accordance with the consent.

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4
Q

What must an LLC’s articles of organization state?

A

(i) the name of the LLC,
(ii) the address of the principal office, and
(iii) the name, address, and written acceptance of the company’s registered agent

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5
Q

Fill in the blanks. In general, upon liquidation, a _____________ of the corporation will take precedence over a preferred shareholder with regard to the corporation’s funds, and a preferred shareholder will take precedence over a _________________.

A

secured creditor; common shareholder

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6
Q

How many directors must a fla corp have

A

at least 1

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7
Q

LLC

What provisions cannot be altered by the operating agreement?

A

The operating agreement may not alter the statutory provisions governing, among others, registered agents, dissolutions, mergers, indemnities, and the rights and obligations of members and managers.

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8
Q

What is the two-step approval process to amend the articles of incorporation if the company has issued stock?

A

i) The board of directors must adopt the amendment to the articles; and
ii) The board must submit the amendment to the shareholders for their approval by majority vote.

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9
Q

Fill in the blank. A corporation can protect itself against the failure to render future consideration by placing the stock in an _________________ or otherwise restricting the transfer of the stock until the promised services are performed, the promissory note is paid, or the promised benefit is received.

A

escrow account

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10
Q

Upon a finding of _________, Florida courts refuse to recognize the de facto status of a corporation.

A

bad faith

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11
Q

In Florida, what is the primary cause of action available to persons who have traded stock?

A

Fraud

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12
Q

does fla issue a certificate of incorporation?

A

no

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13
Q

Unless otherwise specified, how long is a proxy good for?

A

11 months

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14
Q

Fill in the blank. A ________________ is a for-profit entity with a corporate purpose of creating or pursuing a general public benefit, which is anything that has a “material, positive effect on society and the environment.”

A

benefit corp

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15
Q

The manner of selection of directors and the authorization of distributions are usually matters determined by statute. But these are matters that can be altered by the shareholders through

A

a shareholder’s management agreement

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16
Q

The articles of incorporation must include the following information:

A
  • the corporation’s name and the address of its principal office
  • the number of shares of the corporation
  • the name and address of the corporation’s registered agent and
  • the name and address of each incorporator
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17
Q

To become an S corporation, the corporation must meet the following requirements:

A
  • it can have no more than 100 shareholders
  • the shareholders must be individuals, estates, certain exempt organizations, and certain trusts
  • the shareholders must be United States citizens or permanent residents
  • the corporation cannot have more than one class of stock and
  • each shareholder must elect for the corporation to become an S corporation.
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18
Q

When a corporation transfers its assets to another entity, the transferee entity is not responsible for the liabilities in tort of the transferor unless

A

it assumes liability

However if it is a merger, then the merged company does assume the torts

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19
Q

What is a promoter’s liability in regard to a corporation?

A

A promoter is personally jointly and severally liable for liabilities created while acting on behalf of the future corporation.

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20
Q

For removal by shareholders, a director can be removed only at

A

a meeting of the shareholders that’s stated purpose is the removal of the director unless the articles state otherwise

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21
Q

A corporation can be dissolved either voluntarily by the directors with the approval of the shareholders or involuntarily by a court on motion of a creditor or shareholder of the corporation. Involuntary dissolution can be sought by the shareholders under several circumstances:

A
  • the directors are deadlocked in the management of the corporation’s affairs, and the shareholders are unable to break the deadlock
  • the shareholders are deadlocked in voting power and have failed to elect successors to the directors whose terms have expired
  • the corporate assets are being misapplied or wasted, causing material injury to the corporation
  • the directors or those in control of the corporation have acted, are acting, or are reasonably expected to act illegally or fraudulently or
  • the corporation has abandoned its business and has failed within a reasonable period of time to liquidate and distribute its assets and dissolve.

Directors refusal to make distribution is not a proper ground for involuntary dissolution

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22
Q

A shareholder does not need to make a demand on the board of directors to remedy a harm to the corporation if

A

the demand would be futile, such as when the directors are not disinterested in the transaction at issue

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23
Q

Which types of decisions require SH approval?

A

major decisions—e.g., merging the corporation into another corporation with the other corporation becoming the surviving corporation—generally require shareholder approval.

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24
Q

One of the main purposes of incorporation is that shareholders are shielded from the liabilities of the corporation. However, in limited circumstances, a plaintiff can “pierce the corporate veil”—i.e., sue a shareholder for the liabilities of the corporation, what are two things you should look for?

A

The Two F’s
Failure to observe formalities
Fraud

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25
Q

LLC

A member of a limited liability company has the power to withdraw their membership. When a member withdraws, what happens to the limited liability company? Does it have to buy out the withdrawing member?

A

The LLC continues to operate if there are remaining members, without the approval of the withdrawing member

NO, the remaining members are not required to buy out the withdrawing member

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26
Q

When a director is involved in a proceeding where the director is allegedly to have acted improperly on behalf of the corporation, the corporation may be required to indemnify the director.
A corporation is required to indemnify a director for all reasonable expenses the director incurred in:

A

in the wholly **successful **defense of the proceeding

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27
Q

Although SHs usually do not owe duties to one anothe, when can a SH owe these duties?

A

When that shareholder is a MAJORITY shareholder they owe duties to the minority shareholders

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28
Q

A corporation is not required to specifically state all activities in which it may engage. But if it engages in activities outside its stated purpose, the corporation has engaged in

A

an ultra vires act

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29
Q

An ultra vires act can only be challenged by

A

(1) a shareholder or the state suing to enjoin the action or
(2) by the corporation taking action against the person engaging in the act

Thus, third-parties CANNOT sue under ultra vires

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30
Q

In Florida, a proper professional corporation situation exists

A

when the corporation renders a single professional service and all members are properly licensed if applicable

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31
Q

How does voting work to pass a resolution for a corporation?

A

In Florida, a quorum exists when a majority of the total number of directors is present.
A majority of the quorum is required to pass a resolution of a corporation’s board of directors.

32
Q

Explain how a voting pool works

A

Shareholders may enter binding voting agreements (i.e., a “voting pool”) that provide how the shareholders will vote their shares
The agreement is an enforceable contract allowed in Florida
The voting pool must be in writing but does not need to be filed with the corporation
Unlike a voting trust, shareholders retain stock ownership

33
Q

How may corporate stock be issued and in exchange for what?

A

The issuance of stock may be authorized by the board of directors, or if the articles provide, the shareholders.

Any tangible or intangible property (e.g., cash, promissory note, other securities of the corporation) or a benefit to the corporation (e.g., services previously rendered, promise to perform services evidenced by a written contract, forgiveness of an existing debt) may be accepted by a corporation as consideration for its stock.

34
Q

When is a corporation reated as a de facto corporation which shields pesonal liability?

A

When owners make a good faith effort to comply with incorporation requirements, the business is treated as a de facto corporation, and the owners are not personally liable for its obligations.

35
Q

A shareholder has a right to inspect and copy corporate records, books, papers, etc., upon:

A

five days’ written notice

36
Q

Under Florida’s default law for corporations, directors are elected by

A

shareholders via straight or cumulative voting

Remember: directors must be a natural person

37
Q

In a non-profit corp, there must be at least how many directors?

A

3

38
Q

The transfer of a membership interest to another person does not automatically give that person the right to participate in the management of the LLC. Instead, the transferee merely acquires the transferor’s

A

right to share in the LLC’s profits and losses

39
Q

When a surviving corporation does not own at least 80% of the merged corporation’s outstanding stock, a majority vote of shareholder shares is required for merger approval. How does the majority vote work?

A

Shareholder approval generally requires a majority of the shares entitled to vote for each class of stock entitled to vote.
NOT the majority of quorum

40
Q

Is a stock split a distribution? What does that mean?

A

NO
Because a stock split does not result in a distribution, it is not subject to distribution insolvency tests.

41
Q

Generally how many days does a corporation have to respond to demand for information of LLC by member?

A

10 days

42
Q

Can an LLC waive the duty of loyalty in its operating agreement?

A

Yes

a partnership cannot but it can specify which acts will not be a violation of that duty

43
Q

Does an LLC’s operating agreement need to be in writing?

A

No, it can be oral

44
Q

What must a member do when they withdraw from an LLC

A

file a statement of dissociation with the department, containing the date the member withdrew or will withdraw and a statement that the LLC was notified of the dissociation in writing

45
Q

What is the statutory procedure for merging a corporation in Florida

A

i) The board of directors for each domestic corporation must adopt a plan of merger;
ii) The shareholders of each domestic corporation must usually adopt the plan of merger; and
iii) The required documents (e.g., articles of merger, amended articles of incorporation) must be filed with the department

46
Q

Florida imposes a __% state income tax on corporations after an exemption of $50,000 of net income.

A

5.5

47
Q

Generally, a special meeting may be called by the board of directors or by shareholders who own at least ____ of the shares entitled to vote at the meeting, but the articles may set a higher percentage of no more than ___.

A

10%
no higher than 50%

48
Q

Does a partnership agreement have to be in writing?

A

NO

49
Q

What are the two types of actual authority

A

Actual authority includes both express authority and implied authority.
i) Express authority can arise from the partnership agreement, an authorization of the partners, or a statement of authority filed with the state; and
ii) Implied authority is based on a partner’s reasonable belief that an action is necessary to carry out his express authority.

50
Q

When is a partner’s dissociation wrongful when the partnership is for a term or undertaking

A

i) Withdraws, except when it follows, within 90 days, the withdrawal of another partner’s wrongful dissociation or dissociation due to death, bankruptcy, or other circumstances described below;
ii) Is expelled by court order;
iii) Is a debtor in bankruptcy; or
iv) In the case of a partner who is not an individual, trust, or estate, the partner willfully dissolved or terminated

51
Q

A creditor of a partner who has obtained a judgment against the partner may enforce that judgment against the partner’s partnership interest by obtaining a _______________.

A

judicial charging order

52
Q

While a corporation is generally not liable for contracts entered into on its behalf before incorporation, it can be come liable by:

A
  • adopting the contract
  • using the contract’s benefits or
  • entering into a novatio
53
Q

A Florida corporation, including a foreign corporation authorized to transact business in Florida, must file an annual report with the Department of State. This report must include several pieces of information:

A
  • the corporation’s name
  • date of incorporation
  • principal office location
  • tax identification number and
  • names and addresses of all the corporation’s principal officers and directors

Does NOT need to include annual revenues

54
Q

What can a committee not do, even if authorized by its bylaws?

A
  • authorize the issuance, sale, or reacquisition of shares, unless pursuant to a formula or method, or within limits prescribed by the board
  • approve, recommend to shareholders, or propose to shareholders actions that statutorily require shareholder approval
  • fill vacancies on the board or its committees or
  • adopt, amend, or repeal bylaws

A committe MAY fix the terms of a distribution

55
Q

Does a controlling shareholder need to own 50% plus one of the corporations shares?

A

NO

56
Q

Do regular meetings of the board of a corporation require notice?

A

NO

57
Q

May a director of the BOD vote by proxy?

A

NO

58
Q

which of the following is an accurate statement regarding the shareholders’ meeting, voting, and quorum requirements for a merger?

A

Shareholders of merging corporations must approve of the merger plan

At the shareholder meeting, a quorum of shareholders must be present, and the merger plan must be approved by a majority vote

59
Q

Can a corporation continue to file lawsuits after it has dissolved?

A

no unless it is for the purpose of winding up—i.e., it may continue to exist for the purpose of closing out its corporate affairs

60
Q

While a corporation may revoke its dissolution at any time prior to

A

the expiration of 120 days after filing articles of dissolution

61
Q

The requirements for filing as an S corporation are:

A
  • the corporation can have no more than 100 shareholders
  • the corporation’s shareholders can be only individuals, estates, and certain exempt entities and trusts
  • the corporation’s shareholders must all be either U.S. citizens or resident noncitizens
  • the corporation may not have more than one class of stock and
  • each shareholder must consent to the S corporation election
62
Q

A limited liability company (“LLC”) is created by

A

signing and delivering articles of organization to the Department of State for filing.
The articles must state:
* The name of the LLC
* The address of the principal office and
* The name, address, and written acceptance of the company’s registered agent.

63
Q

Can an LLC be managed by a non-member?

A

YES

64
Q

if you see a partnership that is converting to an LLP, and there are oblgiations that they incurred before filing the conversion statement, who is responsible?

A

If actions occured before the conversion, the partners and the partnership bc it was still a regular partnership at the time

65
Q

A partnership may become a limited liability partnership by filing a statement of

A

qualification with the Department of State

66
Q

In a limited partnership, a partner may contribute a promise to pay cash, provide property, or perform services. But the partner’s promise of a future contribution must —– in order to be enforceable?

A

be written in order to be enforceable

67
Q

Can a transferee of a partnership interest access partnership records? Can they get an accounting?

A

NO access to records prohibited by statute
May only demand an accounting for the period spanning from the date of the last accounting to the date of dissolution

68
Q

In a professional limited liability company, a member is personally liable for

A

torts under member’s direct control

69
Q

A Florida corporation must have at least one director, and the articles or bylaws must specify the number of directors that the corporation requires or a method for determining that number. In addition, the articles may:

A
  • include a provision providing for the preemptive rights for its shareholders, although it is not required to do so, and
  • specify an effective date of ** five business days or less before** the filing date or 90 days or less after the filing date.
70
Q

Under the Florida Business Corporations Act, the articles of organization (1) must —- and (2) may —–

A

MUST authorize classes of shares or series of shares that both have unlimited voting rights and are entitled to net assets of the corporation upon dissolution,

MAY set a redemption price based on an outside source that is objectively ascertainable
MAY fix a par value for stock

71
Q

An amendment to the articles of incorporation that adversely affects the rights of the shareholders of a particular class or series of stock, that class or series of stock is entitled to vote on the amendment and must approve the amendment by

A

a majority.

72
Q

do shareholders have preemptive rights?

A

NO unless the articles of incorporation expressly grant them.

if granted but the articles do not spell out the substance of those rights, then statutory restrictions –> no preemptive right with respect to shares:
* issued as compensation to directors, officers, agents, or employees of the corporation
* issued to satisfy option rights created to provide compensation to directors, officers, agents, or employees of the corporation
* authorized in the articles and issued within six months of incorporation
* issued pursuant to a court-approved reorganization or * shares issued for consideration other than money.

73
Q

Can a shareholder agreement exculpate directors from all personal liability?

A

NO

74
Q

A committee formed to investigate whether a shareholder derivative action was in the best interest of the corporation must have at least how many member-directors?

A

two director-members for a court to dismiss the action based on the committee’s recommendation.

75
Q

Can a director be removed by other directors?

A

NO
shareholders may remove a director with or without cause, unless the articles provide that a director may only be removed for cause, or
a circuit court may remove a director from office in a judicial proceeding commenced by or for the corporation.

76
Q
A

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