Corporations & LLCs Flashcards
what is the biz judgment rule?
a presumption that a director’s decision MN be challenged if the director acted in good faith, with the care that an ordinarily prudent person would exercise in a like position, and in a manner that the director R believed to be in the best interest of the corporation.
when can a transaction be set aside that involves a director’s personal interest?
just having the personal interest is N enough, CN be set aside if the director disclosed all material facts to the board. if the director DN, then can be set aside.
what is an exculpatory provision? what are the limits of an exculpatory provision?
A corporation’s articles of incorporation may limit or eliminate directors’ personal liability for money damages to the shareholders or corporation for actions taken, except to the extent that the director, rec’d a benefit, to which he was not entitled, intentionally inflicted harm on the corporation or its shareholders, approved unlawful distributions, or intentionally committed a crime. Negligence is insufficient.
if the article of incorporation conflict with the bylaws, which control?
the articles of incorporation control
who may vote at a shareholder’s meeting?
only shareholders of record on the specified record date
no shareholders have to vote in person?
no, they can use a proxy
how do you revoke a proxy?
proxies are generally revocable. proxies are irrevocable when coupled with an interest (n proxy holder essentially pays for the right to be a proxy)
how do you revoke a proxy?
proxies may be revoked by a subsequent instrument or a shareholder showing up to vote in person
what types of shares can be voted?
only oustanding shares can be voted, shares that have been repurchased CN be voted
what is the extent of power that a corporation’s president has?
a president is an agent of the corporation and has whatever power the corporation grants her. as a general rule, unless otherwise specified, a president will have the power to enter into contracts relating to the day to day biz of the corporation. a corporation. A corporation president can have power to enter into extraordinary transactions if authorized by the board of directors. However, the board CN give the president powers that the board itself DN have.
how do you determine if a power given to the corporate president was properly done?
- is it a duty the board can delegate
2. whether the board’s vote was proper
if the articles are silent, when can a meeting of the board of directors take place?
when there is a majority of the directors present, i.e. a quorum
what is needed to pass a resolution?
supporting vote from MAJ of the quorum
if the purpose of a corporation is to participate in “any lawful biz”, can the director’s vote to go into a new business?
yes, even like a tennis club
what is needed to make a fundamental corporate change?
shareholder approval
